MikeZ is speaking from both sides of his mouth. A leaner nortel now means he needs to cut back all the fat he brought with him with a bigger CTO, bigger Project management teams, more auditors, more marketing and more 6 segma people who are still not meeting their target of saving the company 1.5 Billion of operating expenses!!!
Mike Z's failure showes up in: higher SG&A spending then ever before, lower R&D which is chocking Nortel's ability to compete and a dead sales organization with very high salaries making them confortable even when they do not meet their Quota.
When he came, he introduced the 6:10 ratio, meaning 6 layers of management and 10 reports per manager. Nortel now have more management layers (sometimes 8 layers), and his initative drove out a lot of next generation middle management out losing a lot of talent. All what he did is hiring more and more higher paid external GE types who have no clue of telecom is other than a phone on a desk.
the current outcome is no surprise: Sales go up by 2%, yet losses keeps mounting. MikeZ and many of the people he brought did very little to save this company. they have one or two more years before they leave the company with money in their pockets and a worthless company.
less
· 1 year ago
"Every coffee bean has to be accounted for"
Nortelhand
· 1 year ago
It has been time to sell this company for a long time. Mike Z has done a great job of taking the company form the mid $20s to well below $10.
Great Job Mike Z. Too bad they did not throw tomatos at you today. You deserve it.
Another Nortel Watcher
· 1 year ago
I've run out of new things to say about MZ, his team, and the state of Nortel's business. Today's call was just the latest reinforcement. MZ and his team are a reflection of the board that employs them.
puddintane
· 1 year ago
"All is vanity" - if MZ had bothered to look into the Nortel Dumpsters, peruse the stock rooms, then peer under the lab subfloors to behold the monumental waste and mess to fix he might have had second thoughts about pulling off the telecom messiah trick (as Barack Obama will be our nation's, say the expert Euros).
many
· 1 year ago
Oh yea! The perfect storm analogy! How long is nortel gona be climing that wave before it flips over and sinks takeing everyone with it?
C'mon. 6/10 management? :) I heard that crap under roth. Nortel management to grunt ratio has remaind consistant since the beginning. Average span of control has alway been about six with multiple VPs with no reports, reporting to an eVPs. Nothing has changed except the bozo in charge.
Nortel watcher
· 1 year ago
geez, who would want Nortel after throwing into the share price all that debt they are carrying? At least Willie Nelson is sighing relief with that 2% sales climb for Q2 just 6 months into his job, get all the credit you can for that Willy...I wonder what Nortel will do next to rev up the salesforce after that costly Vegas pep rally in Q307 (or abouts).
I think one of the best judging moments of Mike Z's tenure(read performance) at NT is coming up in the next 6 months when the media divulges who was approached in the industry to take the reins at AL-LU from Russo.
puddintane
· 1 year ago
"And then there were the cultural problems. Key positions were divided between French and American executives, as was the board."
If we want to believe the media, the francjules are snidely satisfied over flashy, brassy, uncultured American loser CEO Russo's depature from Alcatel-Lucent.
Mike Z is a Yugo/Macedonian come to the US as a teen, but surely you can blame neither his nationality nor his culture for his failure at Nortel? His innate leadership skills must've been watered down adapting to the American Way. Nortel belongs back in the hands of a Canadian - a French-Canadian. After all, it did get great from being The French part of Canada to begin with.
“The deferred revenue balance, as at June 30, 2008 of $2,529 million, decreased by $314 million during the second quarter of 2008 and decreased by $580 million year-to-date.”
2. New orders declined around $500 mill /future revenues/ in just q2 2008 and in my opinion it’s not only Sprint responsible for lower orders!
“Orders were $2,153 million in the second quarter of 2008, compared to $2,683 million for the second quarter of 2007, and $2,548 million for the first quarter of 2008. Compared to the second quarter of 2007, orders were primarily impacted by lower CDMA orders in North America and lower orders from the LG-Nortel joint venture.”
3. Domino effect could be next as Mike Z warned yesterday
Environment and Outlook(b)
Nortel faces a challenging business environment with increasing risk due to general macro-economic weakness, continuing competitive pressures and potential of further reduced capex spending by key North American CDMA customers.
4. Nortel plays games with investors fooling them into believing that revenues are increasing, margins are increasing; so why the loss Tripled? Logic should be that with increased rev and improved margins loss should be smaller or profitability should be reported… Nope, loss tripled in q2 2008
5. Another bad news was about cash
"Cash balance at the end of the second quarter of 2008 was $3.07 billion, down from $3.22 billion at the end of the first quarter of 2008. " and - Cash balance, as at June 30, 2008 of $3.07 billion, included an outflow of cash from operations in the quarter of $74 million.
6. Congratulations to all Bear posters on NT stock
You were just right in your research of NT stock. You protected your families and friends from investing in that gravy train going to the last station. bears vs bulls war continue on all message boards and blogs but NT stock is one of the most entertaining. The stock is pegged at $3 bill and trading at 65 Cents pre split There is a reason for that.
Mrs Russo resigned her CEO position after few quarters of disappointing numbers. Will Mike Z do the same? How Mike can reverse falling stock to protect investors? I know Mike will get more $$ for good margins he created_presented and even used own name for them. My comment as above Too bad that better margins don’t bring good fruit, what’s wrong with the numbers, Mike? Do you want to ride NT stock to zero and use AirCanada scenario? Bears here or there will protect own friends no matter what tricks you use.
Apple
· 1 year ago
I found some answers for my nr 4 position in the Highlights Deferred revenues read what analysts say about that revenue. "Some analysts questioned whether Nortel could deliver on its promises of growth.
"We are taking a more conservative approach considering that the macro environment still remains challenging," said Mark Sue, an analyst with RBC Dominion Securities.
A growing concern to some is Nortel's reliance on deferred revenue. The company booked $314-million of previously deferred revenue in the second quarter and said it will book an additional $350-million in the fourth quarter, meaning it may recognize more than $1-billion for the full year.
"The deferred revenue is being pulled off the balance sheet, and it's not quality growth or organic growth," said Kenneth Muth, of Robert W. Baird & Co. "That's where the stock is reflecting that it wasn't a clean quarter."
The deferred revenue is coming from software and service contracts signed in previous years for which Nortel hadn't defined "fair value" at time of delivery. While deferred revenue is common for equipment suppliers selling to phone companies, the amount Nortel has this year clouds both how much new business the company is generating as well as profitability. Costs of this revenue were recorded at an earlier time." SIMON AVERY http://www.globeinvestor.com/servlet/story/GAM....
my comment We all remember $3.5 bill and $1.5 bill revenues removed from the years 2000-2003 as recognized too early /restatement nr2 and restatement nr3/ So that revenue became deferred revenue on Nortel's books after restatements. I guess new CFO started to recognize that revenue in 2008 in big chunks. Sure thing is that restated revenue has to be recognized on the books again as sales. As we see it would be as much as $1 bill of recognized deferred revenues in 2008 including revenues from restatements. That's why analysts were pondering Mike to answer if Nortel is growing organically. Will analysts accept single digit growth on paper or will they not? Does Nortel have to explain def. rev. or does she not? It's another question.
ex-nt2
· 1 year ago
6/10 layers. phoeey. Jackass Z should know by know all the useless VPs and Directors accumalated in the organization. Directors are demoted and put into a team with peers at a manager level. Salaries etc. all remain the same. Senior management / executives laid off mysteriously find jobs crafted specially for them at the same level. hundreds of people with no skills are kept on as acting managers or project managers or architects. we all know by know Z and his band of stooges are not here to turnaround, change or make a profit. They ae here to make as much money as they never did before by setting themselves up with huge pensions once they leave the company in two years.
this company is DEAAAAAAAD. they have just moved next gen projects under CTO which will be killed off. tons of redundant products developed in multiple organziations. this bean counting turd and his cronies will go where no previous Nortel CEO has gone before. Bankruptcy is surely going to happen.
ex-nt2
· 1 year ago
its more like 8 or 10 layers.
CEO - President - Exec VP - VP - Director - Senior Manager - Manager - Team Leader - Line staff
many senior managers just manage 2 managers. tons of senior managers are sitting around as six sigma. managers have team leads doing their job.
most do not want to leave as its comforable.
Lonely Ops Guy
· 1 year ago
The internal situation is becoming unbearable. Nortel lacks not only products, but also people to support its solutions (and 3rd party). I am putting my professional career on the line when I speak with Customers when I make commitments, by not having proper internal backup. All we have are the SPT (sales prevention teams) working full speed ahead. I wonder how the sales folks have the courage (yeah, that's the word) to face Customers and commit to Nortel solutions and not being sure if what they sold will be ever delivered.
ex-nt
· 1 year ago
LonelyOpsGuy. Do not worry, use your old boss's tactic and grab the customer from the nick next time you present :-).
Daniel
· 1 year ago
Lonely ops. Are you about to be laid off or were you? I hear the sales guys are badly overpaid. Hopefully they'll start cutting that back and pay them for results rather than title. That is what I hear down here in the U.S. So what does an ops guy speak to a customer about?
ex-nt2
· 1 year ago
stock is under 6 bucks again. this guy sucks man.
less
· 1 year ago
(i)"Reports indicate that the gruesome _____, unprecedented since _____ (ref. Hitler), that the ____-based ____-American financial cartel-dominated international press is using to work world opinion into a frenzy against ________ (the Downtrodden), is controlled top-down as a high-level _____ (ref. Exxon) -run counterinsurgency operation."
- Vote Lyndon LaRouche(/i)
Dissapointed Share Holder
· 1 year ago
Well lets see the ZMan got a 21.5% increase for stellar performance in 2007 taking his total comp to $10.1M. Jesse Joel got a 21% increase for stellar performance, and for not grabbing anyone in 2007, taking his total comp. to $2.03M. I guess their both in for another personally profitable year given the 2Q08 results....great work you two, you should be proud.
Lonely Ops Guy
· 1 year ago
Daniel: The way things are going, people will be laid off, regardless. Nowadays, anybody that fulfills the following criteria: a) produces work, b) is low level in the org and c) has a blue badge that says "Nortel", has the potential to be laid off..... As for the Sales folks being overpaid, I would not mind that at all. The logic here is: "more POs" equals "more work". However, in order to get POs, you need products and scale. And Nortel currently lacks both. As for what type of commitments an Ops guy should be afraid to make to customers, I can mention simple things as an implementation schedule or equipment delivery dates or equipment shipments without any type of shortages or skilled and available support teams for our and 3rd party products and so forth and so on....
Daniel
· 1 year ago
So ops guy ..you planning on leaving the company due to your dissatisfaction? Can you just walk into a jobs somewhere else?
Lonely Ops Guy
· 1 year ago
Daniel: I'm really trying to, you bet I am. I have plans to fulfill and mouths to feed just like anybody else. However, I can tell you I've been with the company for 13 years now. All I have today is due to my job and believe me, I'm truly grateful for that. Despite my desperate call for help, I do my best everyday to try turn things around and follow management advice to improve things. But one thing is to follow strategy...the other thing is to put your professional career on the line...... Despite your irony, what I'm saying is reality and I believe lots of people that read this blog are living exactly the same situation as I am. And you can't change that, can you? Your attitude is exactly the same as management lately. Twisting reality "Jesse Joel"-style..."love it or leave it". I'm not making up stories or inventing lies here and I'd love to continue working for this once before great company. I am really sad to see what we were before and what we are now.
Nortel watcher
· 1 year ago
Lonely opps, I know a couple of people of the 30K left...these guys have been there between 15 and 17 yrs and are pulling about $160K judging from their lifestyles...I can tell you that they are as carefree as one could be with regards to cars, homes, vacations, etc. You would think they work for Cisco or Juniper and not Nortel...
I guess what I'm trying to say is that you seem to be one of the few Nortelians that have a conscience and don't want to see it all go to hell on a handbasket....good luck man!
Observer
· 1 year ago
Does anyone think Mike Z's comment about consolidation was begging someone to buy Nortel. It sounded quite desperate. Now that the economy is going to hell, there be mass layoffs again at all companies including Cisco and Juniper. Sadly none of it had ot happen as the economy has been victimized by the largest credit binge in the history of time. Now that is unwinding and everyone will suffer the consequences.
puddintane
· 1 year ago
I feel that every (good) company I've worked thus far had a distinct identity, a personality, but I'd never before worked for a company that developed autism via Tourette's Syndrome. When Nortel brass took to "leveraging strategic synergies to source new paradigms", as the spending continued to spike while their stock continued to fall I knew something was amiss. "Paradigms. Leverage more paradgims. Definitely paradigms." Mike Z is pretty aloof. Neither he nor his cheeerleaders ever graced the labs I once worked in. They had us turn down/off lights to save electricity as our comrade Indians and Chinese arrived to learn the ropes of DMS and meet the new IBM guys.
If your partner did this to you what would you call it?
puddintane
· 1 year ago
"Sadly none of it had ot happen as the economy has been victimized by the largest credit binge in the history of time"
Yep. The masses were seduced, even forced to binge on lifestyles far beyond their means.
Observer
· 1 year ago
I'd never before worked for a company that developed autism via Tourette's Syndrome.
Can't get much poorer in taste or sensitivity than this. If you think having either one of these is something to use as a metaphor for an ailing telecom company, you are sorely out of touch with reality. Having either one of these conditions is something that cannot compare to working at a flailing company.
Observer
· 1 year ago
Yep. The masses were seduced, even forced to binge on lifestyles far beyond their means.
Seduced yes. Forced no. The mistake people make is trusting the system. The powers that be leverage the system to their advantage based people's trust. Don't trust the system. Use cash. Don't buy anything you don't need. Take delivery of some gold and silver coins. Don't trust the banking, government or any other centralized system.
less
· 1 year ago
This is oldest hat by now: Yer buddy Marx said "religion is opiate of the masses". Sure enough, if you go to most any place of worship you'll find "irrefutable proof" of this.
But then if you go to a NASCAR race you'll find fast cars, too, are the opiate of masses, global warming be damned. Normally intelligent men and women worship overpaid basketball stars while ogling rubber-boobed cheerleaders. The ever-trusting masses just forked over $14 mio to see exclusive pics of Angelina and Brad's (no introduction or surnames necessary; they're old friends) twins. I'm supposed idenitify with these masses?
You (in the guise of "we") persist in turning the masses on to the opiate of victimization.
less
· 1 year ago
Having either one of these conditions is something that cannot compare to working at a flailing company.
See, now you purport to speak for the afflicted masses, feeling their pain.
Nortel watcher
· 1 year ago
If it wasn't clear before, it certainly is now. Mike Z. and his GEniuses can no longer aim for a 3 to 5-yr turnaround for Nortel. This ship may not even turn around at all despite who's at the helm. The laundry list is so damn long for this company!
All Comments
Mike Z's failure showes up in: higher SG&A spending then ever before, lower R&D which is chocking Nortel's ability to compete and a dead sales organization with very high salaries making them confortable even when they do not meet their Quota.
When he came, he introduced the 6:10 ratio, meaning 6 layers of management and 10 reports per manager. Nortel now have more management layers (sometimes 8 layers), and his initative drove out a lot of next generation middle management out losing a lot of talent. All what he did is hiring more and more higher paid external GE types who have no clue of telecom is other than a phone on a desk.
the current outcome is no surprise: Sales go up by 2%, yet losses keeps mounting. MikeZ and many of the people he brought did very little to save this company. they have one or two more years before they leave the company with money in their pockets and a worthless company.
Great Job Mike Z. Too bad they did not throw tomatos at you today. You deserve it.
C'mon. 6/10 management? :) I heard that crap under roth. Nortel management to grunt ratio has remaind consistant since the beginning. Average span of control has alway been about six with multiple VPs with no reports, reporting to an eVPs. Nothing has changed except the bozo in charge.
I think one of the best judging moments of Mike Z's tenure(read performance) at NT is coming up in the next 6 months when the media divulges who was approached in the industry to take the reins at AL-LU from Russo.
If we want to believe the media, the francjules are snidely satisfied over flashy, brassy, uncultured American loser CEO Russo's depature from Alcatel-Lucent.
Mike Z is a Yugo/Macedonian come to the US as a teen, but surely you can blame neither his nationality nor his culture for his failure at Nortel? His innate leadership skills must've been watered down adapting to the American Way. Nortel belongs back in the hands of a Canadian - a French-Canadian. After all, it did get great from being The French part of Canada to begin with.
1. Deferred revenues are decreasing fast; deferred revenues declined $580 mill ytd,
“The deferred revenue balance, as at June 30, 2008 of $2,529 million, decreased by $314 million during the second quarter of 2008 and decreased by $580 million year-to-date.”
2. New orders declined around $500 mill /future revenues/ in just q2 2008 and in my opinion it’s not only Sprint responsible for lower orders!
“Orders were $2,153 million in the second quarter of 2008, compared to $2,683 million for the second quarter of 2007, and $2,548 million for the first quarter of 2008. Compared to the second quarter of 2007, orders were primarily impacted by lower CDMA orders in North America and lower orders from the LG-Nortel joint venture.”
3. Domino effect could be next as Mike Z warned yesterday
Environment and Outlook(b)
Nortel faces a challenging business environment with increasing risk due to general macro-economic weakness, continuing competitive pressures and potential of further reduced capex spending by key North American CDMA customers.
4. Nortel plays games with investors fooling them into believing that revenues are increasing, margins are increasing; so why the loss Tripled?
Logic should be that with increased rev and improved margins loss should be smaller or profitability should be reported…
Nope, loss tripled in q2 2008
5. Another bad news was about cash
"Cash balance at the end of the second quarter of 2008 was $3.07 billion, down from $3.22 billion at the end of the first quarter of 2008. "
and
- Cash balance, as at June 30, 2008 of $3.07 billion, included an outflow of cash from operations in the quarter of $74 million.
6. Congratulations to all Bear posters on NT stock
You were just right in your research of NT stock. You protected your families and friends from investing in that gravy train going to the last station.
bears vs bulls war continue on all message boards and blogs but NT stock is one of the most entertaining. The stock is pegged at $3 bill and trading at 65 Cents pre split
There is a reason for that.
Mrs Russo resigned her CEO position after few quarters of disappointing numbers.
Will Mike Z do the same?
How Mike can reverse falling stock to protect investors?
I know
Mike will get more $$ for good margins he created_presented and even used own name for them.
My comment as above
Too bad that better margins don’t bring good fruit, what’s wrong with the numbers, Mike? Do you want to ride NT stock to zero and use AirCanada scenario?
Bears here or there will protect own friends no matter what tricks you use.
Deferred revenues
read what analysts say about that revenue.
"Some analysts questioned whether Nortel could deliver on its promises of growth.
"We are taking a more conservative approach considering that the macro environment still remains challenging," said Mark Sue, an analyst with RBC Dominion Securities.
A growing concern to some is Nortel's reliance on deferred revenue. The company booked $314-million of previously deferred revenue in the second quarter and said it will book an additional $350-million in the fourth quarter, meaning it may recognize more than $1-billion for the full year.
"The deferred revenue is being pulled off the balance sheet, and it's not quality growth or organic growth," said Kenneth Muth, of Robert W. Baird & Co. "That's where the stock is reflecting that it wasn't a clean quarter."
The deferred revenue is coming from software and service contracts signed in previous years for which Nortel hadn't defined "fair value" at time of delivery. While deferred revenue is common for equipment suppliers selling to phone companies, the amount Nortel has this year clouds both how much new business the company is generating as well as profitability. Costs of this revenue were recorded at an earlier time."
SIMON AVERY
http://www.globeinvestor.com/servlet/story/GAM....
my comment
We all remember $3.5 bill and $1.5 bill revenues removed from the years 2000-2003 as recognized too early /restatement nr2 and restatement nr3/
So that revenue became deferred revenue on Nortel's books after restatements. I guess new CFO started to recognize that revenue in 2008 in big chunks. Sure thing is that restated revenue has to be recognized on the books again as sales. As we see it would be as much as $1 bill of recognized deferred revenues in 2008 including revenues from restatements.
That's why analysts were pondering Mike to answer if Nortel is growing organically.
Will analysts accept single digit growth on paper or will they not? Does Nortel have to explain def. rev. or does she not? It's another question.
this company is DEAAAAAAAD. they have just moved next gen projects under CTO which will be killed off. tons of redundant products developed in multiple organziations. this bean counting turd and his cronies will go where no previous Nortel CEO has gone before. Bankruptcy is surely going to happen.
CEO - President - Exec VP - VP - Director - Senior Manager - Manager - Team Leader - Line staff
many senior managers just manage 2 managers. tons of senior managers are sitting around as six sigma. managers have team leads doing their job.
most do not want to leave as its comforable.
Are you about to be laid off or were you?
I hear the sales guys are badly overpaid.
Hopefully they'll start cutting that back and pay them for results rather than title.
That is what I hear down here in the U.S.
So what does an ops guy speak to a customer about?
- Vote Lyndon LaRouche(/i)
The way things are going, people will be laid off, regardless. Nowadays, anybody that fulfills the following criteria: a) produces work, b) is low level in the org and c) has a blue badge that says "Nortel", has the potential to be laid off.....
As for the Sales folks being overpaid, I would not mind that at all. The logic here is: "more POs" equals "more work". However, in order to get POs, you need products and scale. And Nortel currently lacks both.
As for what type of commitments an Ops guy should be afraid to make to customers, I can mention simple things as an implementation schedule or equipment delivery dates or equipment shipments without any type of shortages or skilled and available support teams for our and 3rd party products and so forth and so on....
Can you just walk into a jobs somewhere else?
I'm really trying to, you bet I am. I have plans to fulfill and mouths to feed just like anybody else.
However, I can tell you I've been with the company for 13 years now. All I have today is due to my job and believe me, I'm truly grateful for that. Despite my desperate call for help, I do my best everyday to try turn things around and follow management advice to improve things.
But one thing is to follow strategy...the other thing is to put your professional career on the line......
Despite your irony, what I'm saying is reality and I believe lots of people that read this blog are living exactly the same situation as I am. And you can't change that, can you? Your attitude is exactly the same as management lately. Twisting reality "Jesse Joel"-style..."love it or leave it".
I'm not making up stories or inventing lies here and I'd love to continue working for this once before great company. I am really sad to see what we were before and what we are now.
I know a couple of people of the 30K left...these guys have been there between 15 and 17 yrs and are pulling about $160K judging from their lifestyles...I can tell you that they are as carefree as one could be with regards to cars, homes, vacations, etc. You would think they work for Cisco or Juniper and not Nortel...
I guess what I'm trying to say is that you seem to be one of the few Nortelians that have a conscience and don't want to see it all go to hell on a handbasket....good luck man!
When Nortel brass took to "leveraging strategic synergies to source new paradigms", as the spending continued to spike while their stock continued to fall I knew something was amiss. "Paradigms. Leverage more paradgims. Definitely paradigms."
Mike Z is pretty aloof. Neither he nor his cheeerleaders ever graced the labs I once worked in. They had us turn down/off lights to save electricity as our comrade Indians and Chinese arrived to learn the ropes of DMS and meet the new IBM guys.
If your partner did this to you what would you call it?
Yep. The masses were seduced, even forced to binge on lifestyles far beyond their means.
Can't get much poorer in taste or sensitivity than this. If you think having either one of these is something to use as a metaphor for an ailing telecom company, you are sorely out of touch with reality. Having either one of these conditions is something that cannot compare to working at a flailing company.
Seduced yes. Forced no. The mistake people make is trusting the system. The powers that be leverage the system to their advantage based people's trust. Don't trust the system. Use cash. Don't buy anything you don't need. Take delivery of some gold and silver coins. Don't trust the banking, government or any other centralized system.
But then if you go to a NASCAR race you'll find fast cars, too, are the opiate of masses, global warming be damned. Normally intelligent men and women worship overpaid basketball stars while ogling rubber-boobed cheerleaders.
The ever-trusting masses just forked over $14 mio to see exclusive pics of Angelina and Brad's (no introduction or surnames necessary; they're old friends) twins. I'm supposed idenitify with these masses?
You (in the guise of "we") persist in turning the masses on to the opiate of victimization.
See, now you purport to speak for the afflicted masses, feeling their pain.