Nortel CEO to detail goals of $1.9 billion R&D spend

Nortel next week will announce where it plans to spend -- and not spend -- its $1.9 billion in R&D budget for 2006, CEO Mike Zafirovski said this week.

During a Webcast for investors, analysts and the media, Zafirovski said Nortel is in rebuild mode after five years of downsizing by two-thirds, restructuring, restatements and accounting scandals.

"We're probably at ground zero right now," he said on the eve of his first 100 days as Nortel CEO.

Part of that rebuilding includes focusing the company's R&D on areas where Nortel is strong, can gain share and can win, Zafirovski said.

"We tried to be everything to everybody," he said. "We spent enormous amounts of money on R&D but it's not as directed to…many of the places where our position today is not as strong as it has to be."

That will soon change.

"We have teams working on where and how we will be investing $1.9 billion," Zafirovski said. "We will be announcing it next week. We have thrown a challenge for us to gain 20 points of market share, at a minimum, in anything in which we participate today. And if not, to be looking at alternatives to those activities."

Some of Nortel's growth opportunities, according to Zafirovski, are in IMS (Internet Protocol Multimedia Subsystem), WiMAX and IP TV. He also said the company's Enterprise operations, thought by some observers to be expendable, would play a bigger role at Nortel.

"There's very strong demand for a No. 2," he said, referring to the opportunity to be an alternative to Cisco. "There's a real chance for us to do that, including how do you bring enterprise solutions working with our carrier partners."

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Copyright © 2006 IDG Communications, Inc.

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