Selling off its Metro Ethernet business should not be a surprise.  We are in a recession.   The telecom carriers have begun rethinking their cap ex programs. Carriers have weasel worded their actions by saying things like: “Spending smarter”, “Spending less in some areas and spending more in other areas”, “We are optimizing our costs”.  All the things you say when times are bad.  If times were good the carrier would be standing on top of the highest hill shouting about the good times.  

Nortel is doing the right thing.  Restructuring finances requires one to admit to having to give up on some dreams in order to survive.

Nortel needs to generate cash, conserve cash, and position itself for growth.  These are all tough things to do when you are not in the best of shape.  I have said this before.  Nortel is taking a long hard look at selling off its metro Ethernet business.  Even though this business has promise, obviously Nortel does not believe the “promise of profits” and the timing of those profits warrants investing anymore money in the area.  I don’t blame them at all.

Even though Nortel is not saying it, it is doing everything that it can to restructure and turn around the company.

Things will get worse.  The telecom carrier-vendor relationship is akin to a roller coaster.  At the head of the ride is the carrier.  At the back of the ride is the vendor.  Imagine the roller coaster going down into the well of the ride.  At this moment the carriers are entering the well.  When the carriers come out of the well, the vendors are entering the well (the bottom of the ride).

My suggestion to Nortel.  First sell off what is not core to your business; generate cash. 

The carriers are already adjusting their views for next year.  Things will get worse before they get better.