Rx for Nortel?

Nortel is a proud company with an excellent reputation for innovative products, especially in the contact center and wireless spaces. Unfortunately the firm has for some years been in rough straits, with what seems to be a sadly neverending stream of cutbacks and downsizings. I live in a town where Nortel has a plant whose size, say longtime residents, is just a fraction of what it used to be.

In what seems to be an insulting blow, an analyst from RBC Dominion Securities in Canada, where Nortel is HQed, has cut its stock target to $0, reported the Globe and Mail. The story says that bankruptcy 'is a distinct possibility'.

Nortel can't keep attriting itself, and spinning or attempt to spin off its assets. At some point it has to step outside of its skin, look at it as others see it (which few companies do, lest they see some unwelcome truths, which is why this exercise is invaluable), assess its strengths and weaknesses in current and future market, and radically refocus itself.

Here are some admittedly extreme options...though in crazed times when one's back is against the wall, crazy may be the only way out

1. Decide to become king of the mature universe of premise-bases switches. Aim to put Mitel etc. out of business, one which Siemens is exiting, and buy up these outfits, divisions, and customers by selling its other lines

2. Be the cloud, for routing and telepresence. Do the reverse of 1. and focus its considerable prowess in network/cloud based routing, and get rid of premised-based switches. Do what IBM did by becoming mainly services firm and leave the low/mid-end hardware making for countries with cheap labor

3. Be wireless solutions only. Dump solutions e.g. IVR, PBXes, that do not directly plug into mobile

4. Go totally virtual except for two showcase/research head and US offices: in Ottawa (in the Confederation Heights area) and in Wilmington, Del.

Why? Power. Ottawa is Canada's capital and Confederation Heights and adjoining areas sits on or just off the main road from Parliament Hill to the airport. Make it easy for decisionmakers, supplicants, and businesses to see you and they may want to stop in. Confederation Heights is a two-minute ride on the O-Train rapid transit from Carleton University, which has an engineering school i.e. interns, recruits, cheap labor etc.

And Wilmington? Just ask Vice President-elect Senator Joe Biden of Delaware. Wilmington is a quick ride on the Senator's (now VP's) favorite mode of transportation i.e. Amtrak's Acela from the Beltway, Congress, and Philly, NYC, and Boston. Great labor force, available property, and star preference.