William Owens, President, CEO, Nortel Networks

It was a contrite but confident William Owens, CEO of Nortel Networks, who spoke to IT Business Group in May.

“”This will pass,”” he said of the continuing storm of controversy swirling around the telecom giant.

“”We know this is a journey to credibility. The company is built on a history

of integrity and trust, the actions that were taken came from inside Nortel management and board, and we’re committed to doing the right things going forward, and we will.””

But as 2004 comes to a close, the picture remains just as murky.

Ongoing probes

Earlier this month, Nortel announced that it would miss its mid-November deadline to restate its results. The company, whose accounting problems have sparked criminal and regulatory probes, said it needed to double-check its revenue reporting, and now expects to finish its restatement in 30 to 60 days.

The stock, which peaked at C$124.50 in 2000, traded for $3.22 as CDN went to press.

Its annual shareholder meeting may be put off to as late as next May.

But while Nortel has become the scourge of Bay St. and Wall St., Owens maintains the problems have to do with bookkeeping, not products, and it’s a different story for customers and resellers.

“”I hear rumours,”” Owens has said, “”but I have not heard a single one (customer or reseller) who has talked to me about that, and I talk to a lot [of them] and so I’m little surprised I haven’t heard more.””

The less-reported story in 2004 was that Owens may be right that corporate end-user customers have not expressed the same dissatisfaction as financial analysts.

User support

One such user, for example, is Peter Barthel, network manager at Toronto’s Mount Sinai Hospital. Barthel appeared at IP World in October to explain why the hospital chose Nortel over Cisco for its IP-based backbone infrastructure.

Mount Sinai is “”trying to mitigate rising health-care costs”” by installing a system that can reduce operating costs over the long term, he said.

The two main attractions of moving to an IP-based network he said are cost-savings, especially because moves, adds, and changes are frequent in hospitals.

It is only one story, but it is telling. Despite a barrage of continuing bad press in the financial and daily media, Nortel continues to make new inroads with its customers.

And under Owen, what Nortel may finally be realizing what IT heavyweights Hewlett-Packard, IBM, Microsoft and Oracle have known for a long time: if you want to get anywhere, let your customers do your talking, and a customer reference, case study-based approach to marketing is the best kind.

Last month, in delivering on a commitment to become a more marketing-led company, Nortel unleashed a global branding initiative with sweeping changes to the company’s look, feel and voice based on the theme, “”This is the Way. This is Nortel.””

Behind the global ad campaign, Nortel said it would be taking an important step in changing the way it defines itself, moving the discussion from “”the network”” to what people “”do with the network.””

As importantly, the company will be targeting CEOs, CFOs and CIOs. It’s this group that makes the key purchasing decisions, and not the technical group that it won over in the past.

Confident message

“”It’s a new day for Nortel,”” the company says, vowing to be more confident and vocal about who it is and the value it delivers to customers.

But a marketing message is only part of the job. Owens needs to make sure Nortel can also articulate a technology vision and offer its customers and partners a road map into the future.

There are profound changes going on in the network, all the way from convergence, to improving network management and performance, to security and interconnecting wired and wireless, each of which, as Owen acknowledges, “”are billion dollar bets.””

“”We know will be tested, and I’m prepared to be tested,”” says Owens. Getting Nortel’s financial house in order and a clever marketing message are only part of his tasks.

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