Nortel's bankruptcy: A year of major change

Thursday marks the end of a very busy year of bankruptcy for Nortel, one that saw painful dismantling of the once mighty telecom giant and that leaves Avaya on the verge of revealing exactly what it plans to do with the enterprise VoIP and switching assets it bought.

Since last January, the company has sold its CDMA division to Ericsson for $US1.13 billion; sold its enterprise division to Avaya for $915 million; sold its core packet network business to Hitachi for $10 million; and is in the process of auctioning off its carrier VoIP gear with an initial bid of $282 million.

Nortel entered the bankruptcy with its then-CEO Mike Zafirovski vowing to bring the company back from the brink, but started selling off bits and pieces of the company almost immediately. By the end of summer he was gone, as were the hopes of a resurrection. Zafirovski reappeared in the fall seeking $12 million, mainly severance pay, an annuity and bonuses.

On Tuesday, Avaya will flesh details of its so-far broad-brush promises about how it will treat overlap in Avaya/Nortel product lines and draw a road map of a VoIP/unified communication migration for Nortel's corporate customers.

The overriding principle of creating the road map is to continue selling and supporting all Nortel lines for 12 to 18 months, but that is about as detailed as the company gets. Tuesday will reveal what products it plans to phase out and the migration path for customers that own them.

Avaya owns the Nortel line of enterprise switches and security gear that the company says it will keep and promote. Key to that is branch-office equipment that supports voice, data and -- more important to Avaya long-term -- unified communications.Avaya won't say until next week what it plans for Nortel's enterprise security products except that it can bring added value to UC infrastructure. The Nortel switching gear creates a one-stop-shop for UC and data infrastructure, but it's unclear how customers would respond to that given Avaya's already extensive partnerships with switch vendors such as Extreme Networks, Brocade and Juniper.

Clearly one of the biggest assets gained by buying Nortel was its extensive stable of corporate PBX customers that Avaya hopes to bring into the fold by transitioning them toward UC. Combined, Avaya and Nortel last year held 42% of all the phone lines shipped in North America.

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