Nortel CEO Maps Out "Hyperconnectivity" Strategy

Nortel is positioned to take advantage of exploding network and bandwidth demands, its top executive said.

Nortel Networks CEO Mike Zafirovski told shareholders on May 2 that the company aims to become a leader in helping companies and carriers take advantage of an explosion of network connections. The network infrastructure vendor, plagued by an accounting scandal and a series of financial restatements, is uniquely equipped for what Zafirovski called "hyperconnectivity," Nortel said. This trend, driven by people's desire to be connected everywhere, will put more devices on networks and make bandwidth demands shoot up, he said. It will include communication from person to person, person to machine and machine to machine.

Nortel's combined experience in wired and wireless networks and in serving both enterprises and service providers gives it an edge over other vendors, according to Zafirovski. However, that very breadth of expertise puts the company up against many big competitors, including Cisco Systems, Alcatel-Lucent, Avaya and the newly formed Nokia Siemens Networks.

Zafirovski, who came to Nortel in 2005, has made numerous changes to get the company back on course. Nortel has shaped its strategy to focus on leading the market for next-generation mobility and converged fixed-mobile systems, as well as for transforming enterprise networks, Zafirovski said. It also plans to play a significant role in the services business, he said.

Nortel has a partnership with Microsoft to develop unified Internet protocol communications systems for enterprises and carriers. And last year Nortel agreed to sell its Universal Mobile Telecommunications System (UMTS) access infrastructure business to Alcatel-Lucent, leaping ahead to fourth-generation mobile technologies while continuing to develop products for the older Global System for Mobile Communications (GSM) and other wireless technologies.

On May 1, Nortel disclosed some of its financial results for the first quarter of 2007, set to be discussed in a conference call May 3, and confirmed its predictions for the full year. The company expects to announce that revenue for the quarter rose 4 percent from a year earlier to US$2.48 billion. For the full year, the company expects revenue to be flat or down slightly from the previous year due to the UMTS divestiture.

Nortel also named David Drinkwater as its chief financial officer, replacing Peter Currie, who left the company on April 30. Drinkwater had been the company's chief legal officer since December 2005.

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Copyright © 2007 IDG Communications, Inc.

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