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Is Nortel Prepping a Major Sale?

Craig Matsumoto
3/12/2009
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Nortel Networks Ltd. could be about to sell two of its major business divisions, according to media reports.

The Wall Street Journal reported late Wednesday that Nortel is in talks to sell its enterprise and wireless business units, which accounted for a combined $6.7 billion in sales in 2008, the publication said.

Ever since Nortel filed for its restructuring on January 14 -- a plan that included a bankruptcy filing in the United States -- some analysts have suggested the wireless division would make an attractive purchase for a rival.

The report suggests Nokia Networks might be a potential bidder for Nortel's wireless assets.

The enterprise division and the optical business -- which includes well-regarded 40-Gbit/s operations -- have also been mentioned as selloff candidates. (See Should Nortel Be Sold for Parts?, Nortel Files for Bankruptcy Protection, and Nortel Rolls On With 40-Gig.)

The WSJ listed Avaya Inc. and Siemens Enterprise Communications -- a joint venture of Siemens AG (NYSE: SI; Frankfurt: SIE) and private equity firm Gores Group LLC -- as being interested in the enterprise unit.

Nortel's already sold off its Layers 4 through 7 business -- the former Alteon Networks -- to Radware Ltd. (Nasdaq: RDWR). It tried putting the Metro Ethernet Networks (MEN) division, which includes that 40-Gbit/s franchise, up for sale in September, but drew no takers. (See Nortel to Sell Carrier Ethernet, Optical Biz, Nortel to Hold MEN, and Nortel to Offload Data Gear to Radware.)

— Craig Matsumoto, West Coast Editor, Light Reading

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waverunner
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waverunner,
User Rank: Light Beer
12/5/2012 | 4:09:40 PM
re: Is Nortel Prepping a Major Sale?
Sounds right to me. I always thought those two divisions had the greatest value. I expect MEN will be capped and put on life support, I wouldn't be surprised if the bulk of current revenue is coming from customer contingency plans and spares.

Anyone remember Access Node? I expect MEN to follow along the same path, slowly fall into oblivion until support is outsourced to a couple of ex-Nortel sys-eng guys.
heretoday
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heretoday,
User Rank: Moderator
12/5/2012 | 4:09:39 PM
re: Is Nortel Prepping a Major Sale?
If the lions share of NT Enterprise is Voice/Unified Communications, may fit well into IBM SOA. But what of the Enterprise Infrastructure bus... Ethernet Switch? IBM likely won't want it... anyone remember Xylan?

Can't see Avaya... too much overlap of products.

Wireless to NS.. why because of Sue Spradley? Maybe to buy the customer base to get.. make a more complete wireless story.. suspect NS better open the top of the NT Wireless cookie jar first to see what is really there.

Wireline.. break off the TDM and give away to Zhone?.. but $100k memory upgrades do have incredible profit margins.

MEN... HUAWEI is making inroads in North America in other areas... why not?
heretoday
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heretoday,
User Rank: Moderator
12/5/2012 | 4:09:38 PM
re: Is Nortel Prepping a Major Sale?
I forgot about the MSFT factor. You may have something there. One caveat is that NT also has a well developed relationship with IBM. They present a two pronged SOA solution with advantages for each depending on the application integration a customer is looking for or has a bias towards. I don't believe IBM can get the unified communications with out NT (or other hardware/app vendor) but I think MSFT can.

It would be a fun battle to watch and one I'd bet NT would like to see to see competetive bidding.
digits
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digits,
User Rank: Light Beer
12/5/2012 | 4:09:38 PM
re: Is Nortel Prepping a Major Sale?
If anyone buys Nortel's Enterprise business, they'll need to be willing, and capable, of working very closely with Microsoft -- that could narrow the field, as a lot of the value in NT's enterprise arm is, I imagine, tied up in the sales that MSFT brings.


See
Nortel, MSFT Unveil Products
http://www.lightreading.com/do...

Nortel, MSFT Add Euro Center
http://www.lightreading.com/do...

Nortel Sees $1B From Microsoft Alliance
http://www.lightreading.com/do...

Ray
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digits,
User Rank: Light Beer
12/5/2012 | 4:09:37 PM
re: Is Nortel Prepping a Major Sale?
the word 'messy' springs to mind...
freetoair
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freetoair,
User Rank: Light Beer
12/5/2012 | 4:09:36 PM
re: Is Nortel Prepping a Major Sale?
From what I have heard (I do not have any detailed inside view) it would seem Enterprise business could stand on its own (with the right Mgmt) - call it Nortel or whatever.

Wireless would seem to have some value as stated for access to customer base - but certainly not for future technology (I have had some insight to that over the past year or so) - they simply have little R&D value to LTE. So what is it worth? Probably a lot less than you might think. If I were to bet Huawei could be the high bidder there.

Yeah and wireline could be a good sustaining business for a long time to the right type of company.

And at a firesale price MEN I would think could be a good buy and bet for an existing company or as new start.
heretoday
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heretoday,
User Rank: Moderator
12/5/2012 | 4:09:35 PM
re: Is Nortel Prepping a Major Sale?
And what of the LG-Nortel JV. It's listed as a separate unit.. Enterprise, Carrier, MEN, LG-Nortel. As I understand disolving it would mean significant payment to LG, but other than that is there any meat to the JV?.. other than.. I'll sell your stuff if you sell my stuff?
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