Nortel: It's All Up for Sale

The gloves are off: Nortel Networks Ltd. is now officially trying to sell all of its businesses.

This evening, Nortel announced a deal to sell some of its wireless assets to Nokia Networks for $650 million, the first major chunk of Nortel to land a buyer since the company went into restructuring. (See Nortel to Sell Wireless Assets to NSN and, if you somehow missed it, Nortel Files for Bankruptcy Protection.)

But the release adds that the company "is advancing in its discussions with external parties to sell its other businesses."

That does mean all other businesses, a spokesman confirms to Light Reading. But it doesn't necessarily mean Nortel, as an entity, is finished.

"Whether or not something would fall under the Nortel brand [after restructuring] would depend on the outcome of those deals," the spokesman says.

Nortel has simply decided that sell-offs are the best way to get top value for the company's technology, CEO Mike Zafirovski said in his written statement: "Maximizing the value of our businesses in the face of a consolidating global market has been our most critical priority. We have determined the best way to do this is to find buyers for our businesses who can carry Nortel innovation forward, while preserving employment to the greatest extent possible."

Since November, Nortel has been restructuring to create standalone business units, seeking "maximum flexibility to choose the ultimate path forward for each of the businesses." (See Nortel Culls 1,300 Jobs, Loses $3.4B.) But this appears to be the first time Nortel is saying that an outright sale is the best option in every case.

It's been presumed that Nortel is hearing offers for most of its major businesses anyway. (See Is Nortel M&A Near? and Is Nortel Prepping a Major Sale?) Separately, Nortel is applying to delist its shares from the Toronto Stock Exchange, having calculated that equity holders will probably get nothing out of the bankruptcy and restructuring processes.

Oh yeah, the NSN deal
The most eye-grabbing part of tonight's news, though, is the NSN deal, the first large piece of Nortel to be sold since October, when the company first offered up its Metro Ethernet Networks business. (See Nortel to Sell Carrier Ethernet, Optical Biz.)

An NSN purchase of the wireless assets had been speculated since April. (See NSN Linked to Nortel Asset Bid and Nortel M&A Plot Thickens.)

In addition to acquiring Nortel's CDMA business -- the second largest in the world -- and its LTE access assets, NSN would offer jobs to roughly 2,500 Nortel employees.

Because Nortel is in creditor protection, the NSN bid triggers an mandatory auction process. That's why the deal is set up as a "stalking horse" deal, allowing for the possibility of higher bids. Nortel had to go through this process before selling its Layers 4 through 7 business (the former Alteon) to Radware Ltd. (Nasdaq: RDWR) on April 1. (See Nortel to Offload Data Gear to Radware and Radware Completes Nortel Buy.)

NSN doesn't expect to be outbid, it seems. An NSN corporate blog entry already talks about "maintaining Nortel’s Ottawa site as a center of excellence," and NSN has set up a welcome page for Nortel employees that includes a hello video -- complete with a Canada vs. Finland hockey challenge -- from chief operating officer Mika Vehviläinen. (Bonus: You learn how to pronounce his name.)

— Craig Matsumoto, West Coast Editor, Light Reading

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Pete Baldwin 12/5/2012 | 4:02:23 PM
re: Nortel: It's All Up for Sale

The Wall Street Journal is taking the same angle only stronger. They use the word "liquidate."


waverunner 12/5/2012 | 4:02:22 PM
re: Nortel: It's All Up for Sale

That's 65% of last stated revenue for its most "lucrative" division, what could the rest possibly be worth? 30%? That's 20 cents on the dollar for secured creditors, no wonder those poor bastards want their severance now!

^Eagle^ 12/5/2012 | 4:02:21 PM
re: Nortel: It's All Up for Sale

it is truly a sad day.  Shameful how such a key creative technology company has been brought low by the greed and short sighted decisions by the executive team.  Gotta get those bonus and fat packages at all costs.  Managing to the quarter and not to the goal of building a sustainable viable company.  Greed. Truly one of the 7 deadly sins.  Roth and his entire team (and the BOD and the executives how replaced Roth's team) who raked the cash off the table instead of re-investing it should be ashamed.  

A great team. Great company, great innovation.  Horrible executive group and board.  

Also, note: some poster mentioned that the wireless division was the only "profitable" one.  From my notes; optical transport and switching is profitable and has been for several quarters.  Nortel is still #1, #2. or #3 in each of it's targeted segments in high bit rate optical transport and switching.  Just that the numbers are so lost in the overall big picture of enterprise, IP stacks, routing, access, etc. etc. etc.  

No wonder this division was talked about as the first to be sold some months ago.  Did not happen for many reasons.  but the division is quite strong.  Shame.

Truly a sad ending.


Stevery 12/5/2012 | 4:02:21 PM
re: Nortel: It's All Up for Sale

The Wall Street Journal is taking the same angle only stronger. They use the word "liquidate."

Selling all of your assets does indeed equivalate to liquidation.  (You "make liquid" the "illiquid" assets.)

Your first sentence in the article is a description of liquidation, but for some reason you omitted the word (why?).

abashford 12/5/2012 | 4:02:20 PM
re: Nortel: It's All Up for Sale

If this is your idea of justice, I hope you are never put in a position to be a judge.

But this IS good news for you too 'inauniverse..', now you can move on with your life and spend less time ranting about the inadequacies of others, or maybe pick a new company to rant about (lucky them).

Funny though, all the successful people I know spend their energies applying what they learned from their mistakes, and not trolling message boards looking for opportunities to heap on spite.

So that said, this isn't just targeted at you 'ina...' but all of the people like you that seem to harbour a deep resentment for past misdeeds that only gets satisfied when others fail.

I considered summarizing my views of you in three words... but decided to provide more context.  :)


inauniversefarfaraway 12/5/2012 | 4:02:20 PM
re: Nortel: It's All Up for Sale

A great day for Justice! Yes, that is with a capital "J".

The bad executive decisions is but a reflection of a company that lost it's moral compass. Years of savaging it's employees could only lead to this conclusion. This is a lesson on how promoting idiots "out of the way" can only lead in spectacular failure.

For eons, this was the way at Nortel, good employees were left at the bottom, or worse, and the absolute cluless idiots were promoted up the food chain. How many times was this heard in the halls at Nortel?

In short, Nortel is a social club masquerading as a technology company. If a person found their way to the right parties and social clubs, they could climb quite well in spite of bad behavior.

Some folks even kept score of how many careers they had ruined. The "club" went well beyond the halls of Nortel, with many alumni infecting many instititions. It is equally astounding that these had not infiltrated government ranks to the point of perpetuating the incompetence even further. One can only guess that they started drinking the cool-aid.

As far as what is profitable, it is very hard to say. The numbers are so blurred and the ability for these folks to accurately report what is realy going on is speculative at best. Once again, this is the culture of cluelessness at work.

Pete Baldwin 12/5/2012 | 4:02:19 PM
re: Nortel: It's All Up for Sale

Stevery -- Call it a lapse of judgement on my part.  At the time (late Friday afternoon) I was thinking there still might be some window open, some scenario where an unsold part of Nortel would continue through the restructuring. So, I was hesitant to use a word like "liquidate" or "dissolve."

Based on Mike Z's comments elsewhere, it's sounding like that's not the case, so yes, 'liquidation' would be the right word.

Stevery 12/5/2012 | 4:02:19 PM
re: Nortel: It's All Up for Sale

Equivalate?  Not in my OED or my Merriam Webster...

Then you need a modern M-W: http://tinyurl.com/kjparl&... (and do people give a damn about the OED for anything other than word histories?)


The bigger issue:  I'm still wondering why Craig sees this as something other than Nortel's liquidation.  Did Nortel PR people try to spin it as something else?

jepbjr 12/5/2012 | 4:02:19 PM
re: Nortel: It's All Up for Sale

Equivalate?  Not in my OED or my Merriam Webster...


jepbjr 12/5/2012 | 4:02:18 PM
re: Nortel: It's All Up for Sale

Right you are (about equivalate, anyway), Stevery.  Neither my paper copy of M-W nor my check on dictionary.com yielded fruit before I posted (although the non-authoritative wiktionary gives a set of meanings that appear to be invented by an over-active contributor).    I supposed that I might be commenting with a native francophone, where equivaloir is a more common verb than its new English counterpart. 

And I do care about the OED, but maybe I'm the last one left.  Need to hold fast to the last shreds of authority in the wiki age. 

And as for the real meat of the matter -- I vote with those calling it a sad day, even if the shipwreck was brought on by a band of reckless officers.  The sadness should be muted by the observation that, if history is any guide, plenty of competently managed startups will rise in its wake (witness Digital Equipment and Bay Networks et al).

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