Avaya-Nortel Full Steam Ahead With Big Challenges

The courts approved the acquisition of Nortel Enterprise by Avaya and dismissed any Verizon objectives.

My Nortel friends tell me that the acquisition is moving ahead, anticipating the the DoJ investigation will not impact these plans (my take on the DoJ in an upcoming blog).

Now execution begins towards long-awaited industry consolidation.

Sorell Slaymake
r does a good job describing what needs to be done. But what needs to be done is very hard in a normal merger (e.g., had Nortel merged with Avaya or Siemens before bankruptcy, as had been rumored) and even harder in this situation.

In a normal 'merger' situation, best-in-class capabilities from each company would be chosen to enhance the offer to customers and to be most competitive in the marketplace.

But this is not a merger but an acquisition under Chapter 11. Business reality says you can layoff an Avaya employee and pay severance or layoff a Nortel employee for no cost. Financial pressures definitely get in the way of doing the right strategic thing.

In fact, Joel Hackney, the president of Nortel Enterprise, has already admitted that only 60% of Nortel employees (excluding Nortel Government Systems and employees in certain countries) will be layed off. I haven't heard of any Avaya layoffs.

My heart goes out to all those Nortel employees that will be dumped in this most inhuman way.

At the same time, Avaya executives have a huge job to do since they have to demonstrate short and long term value to their owners (Silver Lake Partners) from their $900M investment.

The last thing we need is failed industry consolidation leaving customers with less choice than before.

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