What to Expect from Nortel in '09

Dec.31.08 | About: Nortel Networks (NT)

Everyone’s into end-of-year lists so here’s what I see after looking into my crystal ball.

1. The metro Ethernet network business will be sold - probably to Huawei - for between $500-million to $750-million. Nortel (NT) will proclaim it’s a great deal that will help with its new focus on software, service and VoIP. Analysts and investors will not be as enthused.

2. Mike Zafirovski remains CEO even though there’s speculation he’ll be fired in 2009. The company’s in too much flux and uncertainty for the board to turf Mike Z. Meanwhile, few high-quality people would be willing to take the job.

3. More cost-cutting and employee reductions. When Nortel announced 1,300 job cuts in November, it was seen as a minor move as opposed to what was really required. Expect Nortel to do another round or two of cuts to reduce operating costs.

4. After disappointing fourth-quarter results, the stock drops to below 15 cents. Nortel shares are delisted from the NYSE for not trading above $1.

5. As social media becomes more of a corporate communications, marketing and sales tool, Bo Gowan, who runs Nortel’s social media operations, is poached by a company looking to boost its social media activities.