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Nortel Says Customers Are Staying On Board

Posted by: Olga Kharif on March 02, 2009

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.

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Reader Comments


March 2, 2009 11:52 PM

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].”

That is complete crap. I know of dozens that have left...and that is just in my little section. This is an epic cluster. I like Mike...but this quote is Dunn-esque

reasonable guy

March 3, 2009 03:07 AM

NOT LOSING a customer is not a sign of confidence... its just a sign your customer's are as broke as you are and can't afford to go anywhere else- FOR NOW!

Wait until they get their bailout monies... they will flee the Nortel Titanic in droves...

Non-Nortel Basher

March 3, 2009 05:24 PM

In my opinion, the majority of bloggers, industry and financial analyst, and the media's treatment of Nortel since their announcement of filing Chapter 11 reminds me of a Piranha attack.

I have yet to see any positive or supportive comments on behalf of Nortel.

The majority of what I have read is all doom and gloom and quick to point out Nortel’s mistakes and shortfalls.

I happen to know Mike and Joel personally and I can attest to the fact that both of them have been working very hard trying to turn the company around.

Do you really think a CEO in their right mind would try to ruin a company on purpose?

For those of you who unaware, Mike and Joel are highly competitive individuals.
I feel that both of them, view trying to turn Nortel around as a personal challenge, similar to a climber summiting Mt. Everest.

All of the negativity in the press is only going to contribute to the undermining Nortel’s credibility to their current and future customers.

If the analysts and media truly want Nortel to succeed, they should stop focusing on the negative and publish something positive for a change.

The gauntlet has been thrown down.


March 3, 2009 07:08 PM

Being compettive does not mean diddle here; operating on ‘informed consent’ is what has not happened from day one. Weather on purpose or not Mr. Z. (and his huge ego) drove Nortel straight into the ground. And even though Nortel has not ‘lost’ Verizon as a customer, they sure as hell lost the LTE deal; gone!

Both Mike and Joel are the two worst-performing managers I have ever encountered in the tech sector and that includes John ‘colored sugar water’ Scully. Clueless but in total denial. Is that Nortel bashing or just stating the facts!---bb


March 4, 2009 08:17 AM

I love Nortel --they have the best products!! They are going through challenges like the rest of the world.
Those folks are good people with good families like yours--

Nortel Bloke

March 4, 2009 11:03 AM

Nortel have a terrific history, if a little jaded at times, and the majority of employees are sticking with them. Yes, we realise that mistakes have been made but I believe they are mostly in pushing technology boundaries beyond customers needs or understanding. They have not had a chance to catch up.
Nortel has been a technology leader for over a century, what a shame if we allow it to go under now.

Nortel Partner

March 5, 2009 10:52 PM

Mike Z is definitely speaking on a broader term, as a Nortel Business Partner, we are seeing significant droves of customers either leaving the Nortel Fold or planning to. Everyday we receive calls from customers telling us that they are looking at other vendors as the budgets permit. I ave an appointment with one tomorrow who is leaving to go to Avaya. Not all customers can afford to rip and replace, but the Enterprise issues are larger that they are willing to admit. We have not sold a single new system in 6 months, upgrades are paying the bills. Add to this the fact of requesting millions for executive bonus, and the ship is sinking!!

another Nortel Partner

March 9, 2009 10:08 PM

While I am a fan of Nortel's technology and most of its employees. I think Mike Z is smoking crack. Enterprise customers are holding back orders, shopping other vendors and yes replacing Nortel equipment with Avaya, Mitel and Cisco. Even the smaller voice players are feasting off the Nortel carcass. If the Nortel board doesnt realize this and either put tight reins on Mike Z or fire him completely they are probably sharing the crack pipe

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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