Declaring recently that Nortel Networks must take 20% of each of its markets or get out was the easy part. Next, new CEO Mike Zafirovski must decide which of its underperformers will dig in and which will surrender.

Analysts generally suspect wireless and voice-over-packet (VOP) segments to be safe. Nortel leads the VOP space with 28% of the market, according to Dittberner. But within the mobile infrastructure space (where it has a 10% share), it is much stronger in CDMA, where it has 20% of the market, than it is in GSM or wideband CDMA, where it has less than 10% each, according to the Dell'Oro Group.

“A lot of enterprise stuff will probably be up on the chopping block because they tend to be weak in that area,” said Ed Snyder, Charter Equity Research analyst.

True, Nortel took just 5% of the Ethernet switch market last year, Dell'Oro said. But it also took 18% of the enterprise IP telephony market. In its most recent quarterly report, enterprises contributed about 26% of Nortel's revenue.

Wireline and optical segments are good candidates for cutting, some analysts said. With about 8% or 9% of the overall optical market, according to Ovum-RHK, Nortel has taken a back seat to Alcatel and Huawei Technologies, fighting for third place each quarter with Fujitsu Network Communications. But it does have 20% of the metro WDM market.

However, because of the way products interrelate within networks, one of the risks Nortel takes in cherry-picking segments within each market is the chance that it weakens its overall presence or expertise in those areas, stranding even its popular products.

“If they knock out the big box, they'd have less ability to compete on smaller boxes,” said Dana Cooperson, Ovum-RHK's optical research director, referring to the Sonet switch and multiservice provisioning platform segments, respectively. “Those smaller boxes are a $5 billion market. You can exist in a $5 billion market without having a huge share.”

In fact, the overall optical market is big, but dispersed, Cooperson said, thwarting Zafirovski's 20% rule. Alcatel is the world's leading optical vendor but holds only 16% of the market.

The OME 6500 Sonet multiservice edge switch is one of Nortel's most promising products. It won 80 new customers last year and rave reviews. But that product could be sacrificed since Nortel only has about 10% of that market.

The company also recently introduced a dispersion compensation chip that few firms have the brainpower to produce. “It's not easy stuff to do,” one financial analyst said of the innovation. “Yeah, the market's slow now, but deal with it. When it comes back, you'll do well. To just walk away from these assets is a bit silly.”

“The flipside of this argument is: Just because you've been in a business since dirt doesn't mean you should stay in it,” Snyder said. “You could keep slugging away at the same thing until you have no top-line growth. [Zafirovski's] an operations guy. He realizes that."