Nortel (NYSE:NT) filed chapter 11 bankruptcy protection for itself and subsidiaries operating inside the United States and Canada. Nortel's move, coupled with recent staff reductions by Alcatel-Lucent and Mitel show that the current economic recession means ongoing challenges for telecom system vendors as customers slow or delay purchases. Nemertes' research has consistently shown financial viability as a key evaluation criteria for systems and services purchases.

Nortel will continue to operate as it progresses through Chapter 11. How Nortel restructures is the great unknown, it's not unrealistic to expect shedding or revamping of business units and product lines.

Impacts:

Enterprises: Nortel customers – don't panic, but prepare a contingency strategy. Plan for potential RFPs to evaluate alternative vendors. Those considering Nortel purchases should delay procurement efforts until the restructuring picture clears.

Vendors: Nortel's troubles present an opportunity to gain market share, but will also add further fear to the telecom system market. Expect more pressure to demonstrate your financial viability to prospects and customers. Don't expect a windfall from Nortel's troubles as an uncertain economy will continue to slow purchases.

Investors: Nortel's key competitors including Alcatel-Lucent (NYSE:ALU), privately-held Avaya, Cisco (NASDAQ:CSCO), privately-held Mitel, NEC (TSE:6701.T), ShoreTel (NASDAQ:SHOR), privately-held Siemens Enterprise Networks, and Tellabs (NYSE:TLAB) stand to benefit.