Nortel: Signed, sealed and (almost) delivered?

Krystle Chow
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Research, workforce carrying on at new homes after the acquisition dust settles

Rick Armstrong calls the large machines “shake-and-bake ovens,” a colourful way to describe the verification devices used to test Ciena Corp.’s networking technology.

The “shake” part, according to Mr. Armstrong, who’s vice-president of products and technology at Ciena, refers to the high-speed movement to which the machine subjects the company’s products, as well as to when the device drops a product to test its ruggedness.

The “bake” portion, unsurprisingly, refers to the high heat applied to the technology to ensure it stands up to harsh weather conditions.

Among other things, the device is testing Ciena’s 4200 series platform, which the company expects to hook up to the newly acquired 40-gigabit/100-gigabit optical transport technology from Nortel Networks Corp.

It’s only been a few days since Ciena wrapped up its US$773.8-million purchase of Nortel’s metro Ethernet networks division, bringing with it about 1,000 Ottawa staff – more than 90 per cent of the optical technology division’s employee count.

Philippe Morin, former MEN division chief, is among the Nortel staff joining what he refers to as the “new Ciena.” While for many the acquisition heralds the death of yet another Canadian company, for Mr. Morin – now the senior vice-president of Ciena’s global products group – and his employees, it means the injection of some much-needed stability and the provision of reassurance to nervous customers.

“Over the past while, it’s been about managing the bankruptcy proceedings while making sure we find the right home for the employees and ensure the environment we had created under Nortel with regards to innovation would be continued with the new company,” he said. “We’re very, very happy about it turning out to be Ciena as it has a very common DNA, vision and strategy (with Nortel).

“There is excitement at being part of a company that is investing again in employees and at being part of a very focused new Ciena.”

In fact, much as in the days of Nortel, Ottawa will be a prime research and development hub for Ciena and the company’s largest site, regardless of function, said Ciena CEO Gary Smith, who joined Mr. Morin for the interview while in town to usher in the first days of the newly combined company.

Ciena will now have a total of about 4,200 staff globally, a quarter of whom will be in Ottawa.

“It’ll probably be the foremost site for optical innovation in the world, and that’s critically important to us going forward. The company will be the number-one combined player in North America and probably number two or number three in the world,” Mr. Smith noted, adding that the company will be better-equipped to take on the major global carriers such as BCE, AT&T and British Telecom.

So far, the transition process has been remarkably smooth, Mr. Smith said, given the new “converged optical Ethernet” approach Ciena is taking.

“It’s the coming together of two particular technologies – one is Ethernet which everybody has in their house, it’s an ubiquitous connection that’s global and it’s very low-cost … together with optical technology which basically allows you to scale a lot of capacity very quickly. We’re the only global player of any size that’s really focused on putting those two together, converging them,” he said. “And particularly, the Nortel MEN division is the world leader in optical high-speed transport, and that’s how it really fits into the combination.”

That’s translated into a strong commitment to Ciena’s local presence, although the Baltimore firm is by no means the only acquirer of Nortel’s technology to promise a continuation of Ottawa’s status as a key R&D centre.

GENBAND Inc. said it expects to hire on about 1,638 employees or about 78 per cent of the total at Nortel’s carrier voice-over-Internet protocol and applications solutions division, although a company spokesperson declined to provide Ottawa-specific numbers since it’s still in the process of closing the US$182-million purchase.

“GENBAND’s number-one gateway position uniquely complements Nortel’s number-one softswitch position, propelling GENBAND to the number-one position in the $2.5-billion carrier VoIP market,” wrote Mehmet Balos, GENBAND’s chief marketing officer, in an e-mail to OBJ. “Since this acquisition was announced, our customers – some of the largest service providers in the world – have expressed their confidence in GENBAND’s ability to lead the market and continue to innovate. The committed and passionate R&D resources in Ottawa will be a key part of this future innovation.”

Mr. Balos added the Texas-based company will have a “considerable operational footprint in Ottawa and it will be one of the company’s major locations” once the deal closes around May. GENBAND did not previously have any offices in Canada beyond a sales organization.

Ericsson, which wrapped up its US$1.13-billion acquisition of Nortel’s wireless infrastructure business in November, hired on more than 1,000 employees in total, bringing its total in Ottawa to about 760.

That makes the local campus Ericsson’s second-largest in Canada, after Montreal which has approximately 1,600 staff, a company spokesperson said.

Meanwhile, Avaya Inc. now has approximately 400 employees in Ottawa and “remains committed” to its presence in the area, wrote spokesperson Joseph Barta in an e-mail, adding that the company has “no immediate plans” to move out of the space it’s occupying at Nortel’s Carling Avenue campus following its US$915-million purchase of the enterprise solutions business.

For its part, Ciena has taken out a 10-year lease on Nortel’s Lab 10, which houses the optical division. Mr. Smith added he’s optimistic about the future opportunities for the combined business and sees potential for expansion.

“It’s an area where we have critical mass, we’ve got great engineering talent and incredible facilities that are probably the best in the world, so it would be an obvious place to expand,” he said. “What we’ve got with Lab 10 is probably the foremost optical lab in the world, so it would be nice if we can get as much around that as close as possible so we can leverage the investment that we’ve made there in the platforms.”

Ciena also expects to maintain Nortel’s relationship with the local colleges and universities, as well as with the ecosystem of suppliers and vendors that’s sprung up around the former bellwether over the years.

Mr. Morin acknowledged that Nortel’s claim to fame as the country’s biggest private-sector R&D investor will be lost, but pointed out the work will carry on regardless.

“It might not be under the Nortel umbrella going forward, but I think ultimately when you look at where the innovation’s coming from, and the commitment to that innovation, that’s the good news and we’re going to see that continue here, as well as continuing the investment with hiring new grads,” Mr. Morin said.



January 14, 2009: Nortel files for bankruptcy protection

May 11, 2009: Nortel announces it will spin out its carrier voice-over-Internet protocol and application solutions business and “decentralize” its carrier sales and global operations functions

June 19, 2009: Nortel launches auction for its wireless infrastructure business; Nokia Siemens Networks is named as “stalking horse” bidder with US$650-million offer

July 20, 2009: Nortel enters into US$475-million “stalking horse” agreement with Avaya for enterprise solutions business

July 25, 2009: Ericsson emerges as winning bidder for wireless division with US$1.13-billion bid

September 10, 2009: Ericsson offers jobs to approximately 680 Nortel employees in Ottawa

September 14, 2009: Avaya wins enterprise solutions business auction; agrees to pay US$900 million in cash and US$15 million for employee retention program. Avaya also offers jobs to 680 Ottawa workers

October 5, 2009: Ciena and Nortel confirm talks to sell metro Ethernet optical business, including the 40-gigabit/100-gigabit optical networking technology developed in Ottawa

October 7, 2009: Ciena launches “stalking horse” bid for metro Ethernet division, offering US$521 million in cash-and-stock deal

November 13, 2009: Nortel and Ericsson wrap up wireless business sale

November 23, 2009: Ciena wins auction for optical business; agrees to pay US$769 million in cash-and-debt offer and hire about 1,000 Ottawa staff

December 18, 2009: Nortel completes sales of enterprise solutions business to Avaya

December 23, 2009: Genband makes initial bid in proposed auction for Nortel’s carrier voice-over-Internet protocol and applications solutions division

February 24, 2010: Nortel decides to sell carrier voice-over-Internet protocol and applications solutions business directly to GENBAND for US$182 million, instead of going through an auction; GENBAND expects it will hire on about 78 per cent of the division’s staff

March 22, 2010: Ciena and Nortel wrap up sale of metro Ethernet networks division

Organizations: Nortel Networks, Avaya Inc., BCE British Telecom Nokia Siemens Networks

Geographic location: Ottawa, US, North America Canada Baltimore Montreal Carling Avenue

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Recent comments

  • Tech Wreck
    April 05, 2010 - 16:37

    Avaya says it's committed to the Ottawa area... The first round of layoffs at the New Avaya occurred last week in Ottawa with lots more to come. I guess that's what they call commitment. The Canadian gov didn't do their homework on that deal. Don't worry there will be other lambs off to slaughter in Ottawa from all these non Canadian tech companies.