Telus CEO Darren Entwistle has made quite a name for himself since being hired in 2000. The list of accomplishments includes the acquisition of Clearnet; reducing operating costs, and establishing a beachhead in Eastern Canada. The only hurdle left to overcome is hammering out a new collective bargaining agreement with 11,000 unionized employees. The big problem, however, is the stalemate between the two sides shows no sign of disappearing. Among the things Entwistle is trying to fix is "adjusting" the nine weeks of vacation enjoyed by Telus employees in B.C. If nine weeks is indeed accurate, no wonder employees aren't willing to budge. I mean, if I had nine weeks of vacation I'd be a much better golfer from spending most of the winter somewhere south. With Telus now threatening to lock out employees if the damage the network, things could get very nasty.

Is ThinkEquity analyst John Tinker trying to be the next Henry Blodget? Sure looks that way after he put a US$330 price target on Google yesterday. It seems ironic - or funny - to see a growing number of analysts tripping over themselves getting on the Google bandwagon compared with last summer when investors and analysts were reluctant to buy into its US$85-a-share IPO. My, my, it's amazing how a couple quarters of strong financial results can change your mind. Henry Blodget - for those of you have already forgotten the dot-com boom - was a little-known analyst with CIBC Oppenheimer who came out of nowhere in December 1998 when he predicted Amazon.com would hit US$400 within the next 12 months. Amazon was trading at US$243 at the time but it touched Blodget's target in a matter of months. This made Blodget a superstar and got him a sweet job at Merrill Lynch where he went on to make all kinds of dubious moves. Perhaps Tinker's looking for a new gig, and figures Google's his ticket to the big time.

Now that people have digested Nortel's 2004 fourth-quarter and annual results, we can focus on the real story: the company's growing inability to be competitive. Over the past 16 months, Nortel has obviously been distracted by accounting and financial restatement issues. In the meantime, rivals such as Cisco and Alcatel have made strategic acquisitions to enhance their technology portfolios, while low-cost suppliers such as Huawei and ZTE have suddenly emerged as viable threats (check out Huawei's inclusion in BT's US$19-billion next-generation network contract.) It's definitely not a pretty picture, and one that analysts and media such as BusinessWeek are starting to pick up on.
So what does Nortel do? While it has to reduce costs, it really needs to look at acquiring cutting-edge technology. The targets could include companies such as Redback, Enterasys, Tellabs, Calix, Foundry and Sycamore Networks. The big issue is Nortel doesn't seem to have the horses to compete in markets such as IP-networks. The BT contract exposed the company's shortcomings. It was troubling CEO Bill Owens conceded Nortel was unable to compete for BT business. I look at Nortel's competitive stance these days, and shake my head when you look back to January 2004 when Nortel posted blow-out 2003 fourth-quarter results and then won a huge VOIP contract from Verizon. CEO Frank Dunn was looking like a hero. Then, it all fell apart.
It is hard not to get the feeling Nortel is poised to become a second-tier supplier - squeezed from the top by stronger rivals such as Cisco, Alcatel and Juniper, and from the bottom by scrappy rivals such as Huawei. If Bill Owens thought he had a tough job in 2004, 2005 could prove to be even more challenging and difficult.