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How Secure is Nortel in RTP?

By Leo John / American City Business Journals Inc
November 16, 2005

RESEARCH TRIANGLE PARK - After eliminating scores of research and development jobs over the past two years, Nortel Networks' Triangle facility is now a global operations center - a unit that supports and hosts clients' technology networks.

Based on a recent reorganization, Research Triangle Park is no longer a part of the company's two focus areas going forward. What once was one of the Triangle's shining corporate beacons appears to be growing ever dimmer.

An employer of nearly 9,000 people in RTP going into the late 1990s, the telecom equipment maker now provides jobs for 2,600. That's down from 3,000 in 2003, with cuts since coming across all divisions.

Most of those 2,600 employees work in Nortel's "global operations center of excellence," which helps large clients keep their networks running, including aiding in disaster recovery services. Some employees work in customer support, sales, marketing, research and development and in human resources and finance.

Two years ago, Nortel's RTP site had a greater focus on R&D.

The company employed 1,500 in operations support; 1,200 in a division called Wireline, which included development work on an Internet technology called voice-over Internet protocol, or VoIP; 100 in the Wireless Division; and 200 in the Enterprise Division, which focused on Nortel's large customers.

A company spokeswoman declined to provide a breakdown of the current local employee base. "The mix of our RTP facility is constantly evolving," says Joanne Latham.

Nortel, which leases 1.43 million square feet of office space in RTP, was a manufacturing center in the 1980s before becoming a development center for telecom software and testing in the 1990s.

Even today, Latham says, RTP remains one of the three biggest Nortel sites worldwide. Others are the company's Ontario headquarters and a facility in Richardson, Texas.

"Is there as much R&D work (in RTP) as two years ago? No," Latham says. But she says the company in RTP is building software for phone carriers and cable and wireless companies that want to add video capabilities to their networks.

There is still R&D here," she says.

In September, Nortel, which is based in Brampton, Ontario, and employs 35,000 globally, announced it was reorganizing into two divisions: one focused on serving large companies called the Enterprise Solutions and Packet Networks, and a second focused on the wireless market called Mobility and Converged Core Networks.

Analysts who follow Nortel are puzzling over how the global support services business at RTP fits into the company's new operations structure.

"That's a good question," says Joel Conver, a telecom equipment analyst with research firm Current Analysis. "It's something we're still trying to get answers to."

Latham says offering support services to customers is a new market opportunity for Nortel.

The company, which is battling several regulatory investigations in October named a former Motorola executive, Mike Zafirovski, as its chief executive.

Conver says bringing in a new person at the helm suggests that Nortel could reorganize again, this time into a different structure. "Our assumption is that the entire organizational structure may be reorganized," says Conver.