Nortel Says Customers Are Staying On Board
I just got off the phone with Nortel’s CEO Mike Zafirovski, who told me that “we’ve not lost a single customer since we filed [for bankruptcy protection].” As you’ll recall, Nortel filed for Chapter 11 in January, and competitors have been trying to chip away at its customer base ever since.
On March 2, the day when Nortel reported its fourth-quarter revenue dropped 15%, Technology Business Research analyst Ken Hyers came out with a note titled, “Nortel Networks Revenue Plunges as Customers Flee.” But, in actual fact, customers aren’t fleeing — yet. In the 48 hours since the bankruptcy filing, Zafirovski says he spoke with more than 60 carrier CEOs, reassuring them that Nortel will stick around and asking for their support. Since the filing, the company’s execs and sales reps have also made more than 4,000 phone calls and visits to customers and suppliers, to keep them appraised of the company’s plans and to ask for their business. That said, “quite a few customers are appropriately questioning our long-term outlook,” Zafirovski says.
Many customers aren’t spending much on new networks amidst the current economic downturn anyway. Zafirovski says that demand “has stabilized at low levels.” What’s more, many carrier and corporate buyers are likely waiting to see Nortel’s new restructuring plan, which could be announced as early as in May.
That said, Hyers says that a number of competitors, such as Juniper, Cisco, F5 and Veraz are specifically going after Nortel customers with sweet deals. “Many customers will choose to wait until reorganization is complete and they understand what the future company will look like before committing to offer long-term contracts to the company,” Hyers writes in an e-mail.