If you've seen the movies "Ferris Bueller's Day Off" or "Kelly's Heroes," you know chaos offers opportunity. Right now, there is chaos as a result of economic conditions, credit markets, shareholder trust and other factors. So what should you as a reseller do?
Do not overreact -- successful businesses rarely make knee-jerk decisions. With banks, Wall Street and auto manufacturers experiencing hardship, will you terminate your banking relationship? Will you cease to invest in publicly traded companies? Will you sell your car in favor of a bicycle? Of course not -- you are not a "lamb."
Let's look at Nortel in that same context. Like most technology manufacturers, Nortel faces challenges. The company has implemented several cost-reduction plans and recently filed for protection from creditors to allow its reorganization and cost-cutting plan to return it to profitability. If you're a Nortel partner, what should your game plan be?
If you're a lamb, you panic and run away. Some lambs have decided to sign on with several manufacturers, hoping that one of them will make them successful when, in fact, success is defined by the reseller's ability to execute. Nothing has changed at Nortel, with the following two exceptions: First, Nortel has an approved plan to return to profitability. Second, a federal judge (and staff) will monitor the sources, uses and operations to meet the approved plan, protecting shareholders, jobs and creditors, although some creditors may have to wait a little longer to get paid.
Nortel also has some very interesting characteristics that offer opportunity under the guise of chaos: The company has more than $2 billion in cash and more U.S. patents than all but a few U.S. companies. Nortel also has a loyal user community. In addition, the company's BCM 50 and 450 products are winning awards and selling well.
There likely will be more Nortel announcements in the next few months. We should expect to hear about the sale or discontinuation of a product line, or the resignation of a key executive or two. But we should also expect this: The "basics" will remain. Here are three things that can happen to Nortel:
One, it can declare bankruptcy. Given that Nortel is under federal protection and is monitored by a federal judge, it would take years for Nortel to burn through its cash flow—therefore, bankruptcy is not a real possibility for quite some time. Two, it could be acquired. If this happens, the stock will surely gain favorable momentum. And three, Nortel could emerge from federal protection as a viable money-maker.
With Nortel's stock price being "value" based, it is a consideration to bet on a company that has 200 million customers and a plan that has been approved by a federal judge. With shareholder confidence near record lows, it's reassuring to have a federal watchdog protecting us. As a reseller, I am pleased Nortel is being "protected." Do not listen to the lambs. Stick to the basics, and you can weather the current market conditions.
Stuart Chandler is president and CEO of Optivor Technologies, a solution provider based in Ellicot City, Md.
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