Mid-October flagged as d-day for Nortel staff

Mid-October flagged as d-day for Nortel staff

Vendor's Australian head says retaining staff is a focus after Avaya emerged as the winning bidder for the company

The head of Australia’s Nortel operations has flagged a mid-October deadline for decisions on its employees’ fate after Avaya emerged as the winning bidder for the embattled company’s enterprise business.

Rick Seeto, who was announced as the head of Nortel’s enterprise business in Australia and New Zealand in August, said while the goal was for the transaction to be closed by December his immediate focus would be the vendor’s headcount.

“Obviously, there is a whole lot of transition stuff that has to go on but, most importantly for our employees, part of my focus is to retain top talent and I haven’t dropped that focus,” Seeto said. “If anything my attention to that will be heightened over the next month or two months as we get through the transition and integration process so that we are taking the best talent we have got into the new enterprise. While nobody knows who will get a job offer, my goal is to keep our good people in tact here. And the aim is to be able to get out to people by mid-October and let them know whether they have a job offer and what that job offer is.”

Avaya reportedly beat out Siemens Enterprise Communications in a bidding process, and will pay $US900 million for the unit and contribute an additional pool of $US15 million for an employee retention program. The price is nearly twice what Avaya was initially said to be buying the enterprise business for back in July before auction bidding kicked in.

The sale, expected to close later this year, is subject to court approvals in the US, Canada, France and Israel as well as regulatory approvals, other customary closing conditions and certain post-closing purchase price adjustments. Globally, the vendor has appointed Deloitte Touche Tohmatsu to prepare a plan to integrate the companies.

Nortel’s troubles were crystallised in January when it filed for Chapter 11 in US bankruptcy court and subsequently went through rounds of staff cuts and selling off business units. Since the announcement there have been 5000 global layoffs, including in Australia, reducing Nortel's work force by 16 per cent, from about 30,000 to 25,000. The company refused to provide a figure for the number of staff it has in Australia.

At the start of 2008 the vendor had a work force of 473 staff according to its filings to the Australian Securities and Investment Commission. It is understood this figure has reduced significantly since the company hit trouble and the economic downturn started to bite.

When the tie up was initially announced it was described by analysts as having the potential to upset Cisco’s dominance in the Australian market place. Nortel and Avaya partners also welcomed the deal when it was first flagged.

Seeto said he had been in contact with many of the vendor’s partners and distributors and claimed the response had been positive. He also reiterated the company would continue to operate as normal until the transaction was finalised.

“From a partner perspective, between now and the actual closure date we are still very much in the business of today-type mode and we have no real plans to move away from that,” he said.

In terms of a roadmap, Seeto was unable to speculate but said it would become available after the deal was closed

“I don’t think Avaya has spent $US900 million on the asset to then turn away a whole heap of customers that represent the value to recover that spend,” he said. “Whatever that product roadmap is I am sure there will be elegant solutions and on-going support for the customers to get value out of the assets they have already bought.”

According to Nortel’s most recent financial statements for Q2, 2009, revenues in the Asian region for the six months to June 30 fell year-on-year from $1.37 billion, for the same period in 2008, to $794 million.

In early September, Avaya integrator, NSC, became a Nortel Gold vendor partner as part of efforts to take a multi-vendor approach.

Jim Duffy from Network World contributed to this article.

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