Sadly, Mike Z. deftly sidesteps the question by saying that “It does good to create jobs for people. With all those blogs, it is another way we are helping the Canadian economy.”

For the life of me, I have no clue what he means. I guess I was hoping he’d say something like “I love blogs, particularly All About Nortel because it’s so insightful”. One can dream, right?!

Anyway, one of the more interesting questions was whether Nortel has to make an acquisition given the speculation it made a bid for Avaya and may be interested in 3Com. Here’s what Mike Z. had to say:

“With respect to acquisitions, 80 per cent of them fail. But I’ve done 80 to 90 acquisitions in my life and I’m pretty comfortable that the majority were done well. I’m not prejudiced on where growth is going to come from – organically or through acquisitions. But we are committed to growth, and we have earned the right. Last year, we did not have the systems, the foundation, the processes to manage our company well, let alone integrate somebody else.”

If you boil down his answer, I think he’s saying “maybe”…or “yes”…or “no”.

Nortel’s move to lower costs by opening facilities in lower-cost geographies took another step forward with the opening of a a new “Centre of Excellence” in Istanbul, Turkey. The facility, which was part of an announcement that year that also included a move into Mexico, will provide support for customers around the world, network technical support for North American customers, and network integration and technical support for customers in Europe, the Middle East and Africa.

Nortel CEO Mike Zafirovski said the facility is “an important milestone in the Nortel story. This center is vital to improving customer support as we enter a new era of communications driven by the convergence of three powerful megatrends we believe are significantly changing the industry – hyperconnectivity, communications-enabled applications and true broadband.”

Translation: If Nortel wants to lower operating costs, increase gross margins and boost profits, the company needs to leverage lower-cost places such as Turkey, Mexico and China. As Canada’s flagship high-tech stories, a big question is how many more jobs will be moved out of Canada and the U.S., especially high-paying R&D positions.

– Robert W. Baird lowered its 2007 revenue estimate to $11.2-billion from $11.5-million, while raising its EPS target to 75 cents from 74 cents. For 2008, Baird is looking for revenue of $11.6-billion and EPS of $2, compared with an earlier estimate of $11.7-billion and $2.11 respectively.  Meanwhile, RBC Capital Markets lowered its 2007 EPS estimate 44 cents from 47 cents on flat guidance; CIBC World Markets lowered its 2007 estimate to EPS of 72 cents on revenue of $11.4-billion from $1 on $12.4-billion; and Prudential Equity Group lowered its 2007 estimates to 17 cents from 45 cents and its 2008 estimates to $1.23 from $1.54.

“All of us at Nortel have an obligation to act with personal and professional integrity. These behaviors are the hallmarks of great leaders and great companies. I place as high a value on integrity and ethics as I do our goals of driving superior performance and business results.

As many of you know, there has been great concern recently because of an incident involving one of our co-workers and a leader, Joel Hackney. Given the nature of this incident I want to personally restate our commitment to ethics and integrity and share the action we have taken.

Last October, following a basketball game that he attended with his wife and children, Joel was involved in an incident that resulted in him entering into a consent agreement, which means he is required to complete certain actions by May 2007 before the charges will be completely dismissed.

Nortel takes this incident very seriously and, for the last six days, Chief Compliance Officer Bob Bartzokas has led a rigorous review involving numerous external and internal interviews (the internal interviews were with employees in and outside of Joel’s organization). This process was comprehensive in nature and I want to assure you that we took full account of all the employee input and response we’ve received regarding the incident.

Bob and the Compliance Committee completed their review and concluded the October incident was isolated. The Committee recommended certain appropriate actions and advised the board of directors of its findings and recommendations. The specific details of the actions will remain private, as they would for any Nortel employee.

Joel deeply regrets this incident and the impact it is having on everyone concerned. Knowing my intent to update you today, he asked me to share the following statement:

“I want you to know that I am taking full responsibility for the consequences of my actions. I have also communicated my personal apology to Ms. Ogden. I know this incident has caused embarrassment for my family, my employer and my co-workers. I am truly sorry.”

Joel is a leader with an important mandate who will need to continue to challenge his team to perform at world-class levels while exemplifying our leadership and core values. His track record includes very strong results and his leadership capability has been validated by employee assessments (as recent as December 2006), which included feedback from all of his direct reports. That said, I know Joel is taking this incident very seriously and will use it to work to become an even better leader.

I am absolutely confident of Joel’s ability to execute our business objectives, and he has given me his full assurance that he will hold to the highest ethical and professional standards expected of a Nortel leader.

Mike Z

“This restatement has no material impact to our fourth quarter 2006 operating expectations or performance, ” said CFO Peter Currie, who’s leaving the company next month after abruptly announcing his resignation a few weeks ago. “During 2006, we have implemented significant remedial measures and other actions to address our internal control weaknesses. This has resulted in a substantial reduction of control weaknesses as at year end and represents a major milestone in our journey toward consistent, reliable and timely financial reporting.”

While the restatement is relatively minor, it’s certainly not a positive sign for a company that appeared to be gaining its footing again and more confidence from investors. Nortel said it expects revisions to its previously reported 2006 nine month results that will boost revenues and improvements in net earnings by about $24 million and $15 million, respectively. Its 2005 results will decline by $28-milion while losses will climb by $87-million. Revenue in 2004 will rise by $33-million while the net loss will increase by $42-million.