Ten longtime customers of Nortel Networks say they want the networking equipment vendor to wrap up its yearlong internal accounting probe as soon as possible. But they all said they’re still committed to using its products.
On Nov. 11, Nortel again delayed the release of its financial results for 2003 and the first half of this year, saying it would need another 30 to 60 days to complete its review of revenue recognition issues and other matters dating back to 1999. Financial analysts reacted sharply, with some of them warning that the continuing delays could cause Nortel to be delisted by stock exchanges in Toronto and New York.
Users such as Mike Hazdra, telecommunications manager at Benedictine University in Lisle, Ill., said they are well aware of the latest financial update from Nortel. Hazdra described the new delay as “a fiasco” for Nortel and said it makes him “wonder what’s going on” at the Brampton, Ont.-based vendor.
“It has made me a less-staunch Nortel supporter, even though their technology is really good,” Hazdra said. But he added that Nortel still offers “the best phone system you can buy” and that a stock delisting or even more dire developments at Nortel likely wouldn’t affect him immediately. “If that happens, I’ll still have a Nortel switch and can still get replacement parts for it,” he said. “I’ll have it sitting here until it rusts.”
Grant Eberlin, manager of IT at NRI Industries Inc., a maker of recycled rubber products in Toronto, said he also has grown more concerned about Nortel as the accounting probe has been prolonged.
“These circumstances must be distracting the company from carrying out its business strategy,” said Eberlin, who has used the company’s Meridian voice switch and other gear since 1992. “How can you have your eyes on the ball of getting out there with products when you’re fighting your financials?”
Potential Fallout
Caren Hart, a board member of the Chicagoland Nortel Networks Users Association, said she worries about reduced support from Nortel if there is further fallout from the probe. Hart is a telecom manager at an insurance company that she asked not be identified. It uses Nortel products in 54 offices nationwide.
On the other hand, Margaret Rettig, a telecommunications manager at a global manufacturing company, said the internal probe hasn’t had any adverse impact on the level of service she receives from the company.
“If anything, Nortel has been much more attentive to us,” added Rettig, who also asked that her company not be named. She is a board member of the Chicago-based International Nortel Networks Users Association, which includes the Chicagoland chapter and 69 other regional groups.
The Burlington Northern and Santa Fe Railway Co. uses Nortel products throughout its networks. Greg Britz, BNSF’s manager of telecom engineering, said IT executives at the Fort Worth, Texas-based company recently were told by outside technology analysts that Nortel is still a solid vendor.
The analysts did say that if Nortel’s revenue fell significantly, it could affect the company’s ability to develop new products. “But our experience over the last two years with Nortel has been quite good,” Britz said. “We feel they’re a strong engineering company, and the proof is that they continue to deliver, even during this difficult time.”
