Ciena's Looking Over Nortel's MEN

At long last, Nortel Networks Ltd. might get a bid for its Metro Ethernet Networks (MEN) business.

Ciena Corp. (NYSE: CIEN) announced today that it's in "advanced talks" to place a bid for MEN. (See Ciena Considers Nortel MEN Bid.)

The announcement follows last month's speculation, from analyst George Notter of Jefferies & Company Inc. , that Ciena and a private equity group were both gunning for MEN. (See Ciena: Ready to Pay for Nortel's MEN?)

Investors don't seem thrilled. Ciena shares were down 37 cents (2.5%) at $14.29 after the announcement. Earlier in the day, shares had been up about 2 percent.

Among possible concerns: A MEN purchase would have to be made in cash, and Ciena only has $1.06 billion of it in the bank. Even though MEN revenues are down, they still measured $333 million during Nortel's second quarter -- a yearly run rate topping $1.3 billion.

Ciena wouldn't be a shocking buyer; in fact, it's long been considered a favorite among possible MEN buyers. (See The Ciena Theory, MEN Watchers, and Who's Waving Their Wad at Nortel’s MEN?)

It might be pointless to compare the prices of Nortel's various pieces. Still, we'll point out that Ericsson AB (Nasdaq: ERIC) shelled out $1.13 billion for the wireless division after an initial $650 million bid from Nokia Networks . And Nortel's enterprise business sold for $900 million after Avaya Inc. started the bidding at $475 million. (See Ericsson Delivers Knockout Blow to NSN and Avaya's $900M Bid Wins Nortel Auction.)

— Craig Matsumoto, West Coast Editor, Light Reading