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Technology Stocks : Nortel Networks (NT) -- Ignore unavailable to you. Want to Upgrade?

To: Mark O. Halverson who wrote (14522)	6/18/2006 11:47:41 PM
From: Fun-da-Mental#1	Respond to of 14638

Mark, My friend has been at Nortel 10 years and survived many rounds of layoffs. He's heard talk of a turnaround so many times in the past that he's stopped caring. But he's not as worried about his own job as he was a little while ago. He heard that his whole department was going to be moved to China. But then they changed the plan, and in fact they're hiring locally now. All he can say is that things are not too bad now. About China, he says it turned out that costs there were not as low as expected, once the Chinese government demanded its share. Salaries are about 1/4 what they are here, but then they need to pay for worker housing, health care, and various other benefits and taxes that add up to at least as much as the salaries. Given the transition costs, technical risks, and the risks of ongoing negotiations with an all-powerful government bureaucracy, they decided it wasn't worth it. This kind of relates to ScratchMyBack's story about India. My take on this is that it was not necessarily a problem with execution; more likely Nortel's mistake was to enter into such a deal in the first place. Probably from the Indians point of view this was a very successful deal, and they are now trying to line up the next sucker, which is not going to be Nortel, since they already got burned once. I am not speaking from any insider knowledge here, I am just speculating, based on similar stories I've heard in my own line of work. China and India play hardball. You may go in there thinking you will make a lot of money off them, but in the end it is the other way around. And more power to them; that's how the game is played.