Nortel's Extreme Makeover

Nortel Networks has suffered its share of financial bumps and bruises. The telecom equipment provider was at the center of an accounting scandal that led to the restatement of financial results for several quarters. As a ripple effect, Nortel's executive lineup changed, including the 2004 firings of CEO Frank Dunn and CFO Douglas Beatty, and the hiring of Bill Owens, now vice chairman and CEO. President and COO Gary Daichendt resigned in June 2005 with only three months at the post after clashing with Owens, and CTO Gary Kunis also left. Despite a heated June shareholders meeting, Nortel's financial irregularities are behind it, and industry watchers are eyeing the company's next moves. "They've caught up with their reporting," says Sheila McGee-Smith, president and principal analyst of McGee-Smith Analytics. "So now my sense is it's stick-to-the-knitting and deliver what's been promised for the last 18 months." Nortel is not growing as fast as competitors Avaya and Cisco, however. "As you're trying to fix your financial situation sometimes R&D suffers," McGee-Smith says. On some level, though, "they're on firmer ground than they were a year ago." Upcoming speech applications releases may help. Roxann Swanson, Nortel's vice president and general manager for multimedia applications, says, "We are starting to really look at how we apply the abilities of speech into our unified messaging platform." At year's end, Nortel Contact Center 6.0 will be released, roughly one year after 5.0's release. Version 6.0 will include outbound capabilities, richer networking capabilities, an OEM agreement with a call-recording provider, and its SIP Contact Center. "We're...building a single applications environment," Swanson says. The key to Nortel's success will be to reconnect with customers, McGee-Smith says: "Their customers are so loyal to them. Their customers don't really want to leave Nortel, so Nortel's got to give them an excuse to stay."