Sunday, May 15, 2005

Bill Owens' World Tour

Mark Evans - Mark Evans

While I've got reservations about whether Bill Owens is the right person to be Nortel's CEO, I give him credit for putting together a strong senior management team and working hard at being CEO. His gruelling travel schedule, which includes commuting from his home in San Diego to Nortel's HQs in outside Toronto, has recently taken him to India and Pakistan. India's Economic Times newspaper had a gushy, gushy profile on Owens. Here's an excerpt:
"Owens’ profile was nothing like you’d expect of a Nortel CEO. He’s not Canadian, he’s not a technology or telecom veteran and he’s not even an experienced corporate executive, let alone a turnaround expert. But Owens certainly had something that Nortel needs at this point — great stature and a reputation for integrity, which are important in raising the company’s credibility among external stakeholders and morale among employees."
Speaking of India, Nortel's US$500-million wireless deal with Bharat Sanchar Nigram Ltd. looks like a dog. It's a "foot in the door but lose lots of money" contract, and Nortel's expects to have about US$195 million of red ink from the agreement by mid-2005. But it gets worse. Look at what Nortel says about it in their 10-K:
"In addition to the orders under the existing contract, BSNL may increase the amounts purchased under the contract up to an additional 50% of the existing contract level to allow for business expansion. We expect that there is the potential for further product losses, which will be determined by the product mix and magnitude of additional orders.
Translation: If the client orders more equipment, Nortel will lose even more money. Sure, India's a big market but do you really want to lose your shirt that badly?


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