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Optical/IP

Huawei Seen as Likely Nortel Suitor

BERLIN -- Carrier Ethernet World Congress -- Here's the question that's on everyone's lips here in Berlin: Who might try to buy Nortel Networks Ltd. 's carrier Ethernet and optical business? (See Nortel to Sell Carrier Ethernet, Optical Biz.)

To recap quickly, Nortel announced last week that it's looking to offload its Metro Ethernet Networks (MEN) business, which houses its optical and carrier Ethernet products. At the same time it reviewed its 4G wireless strategy and announced a profits warning. (See Nortel 4G Plans Up in the Air.)

Nortel wants a cash deal for MEN, but won't say if it is already engaged with any potential buyers.

It's also unclear what sort of price the business unit, which is on course to generate between $1.5 billion and $2 billion in revenues this year, might carry. Here in Berlin, the range of estimates (from those brave enough to guess) is anything from $250 million to $2 billion.

There's also talk here in Berlin that two companies -- Ericsson AB (Nasdaq: ERIC) and Huawei Technologies Co. Ltd. -- have instructed their bankers to check out the details of the proposed sale, though neither company is prepared to comment on any speculation regarding any potential move for the Nortel division.

With the topic attracting much gossip and speculation, Light Reading conducted a basic face-to-face verbal survey of carrier Ethernet industry executives to find out who they think might be interested in Nortel's optical and carrier Ethernet business.

We approached more than 50 individuals, of whom 44 provided an answer, with some providing more than one suggestion. No options were offered to respondents –- they had to come up with their suggestions themselves.

Most of our respondents took the question seriously, some less so -- hence the inclusion of Wal-Mart among the responses.

The results of this somewhat unscientific survey? Well, Huawei was, by a clear margin, the company suggested the most, a choice that, in Light Reading's view, makes sense. (See Why Huawei Should Buy Nortel's MEN .)

But other big names also received multiple votes, particularly Cisco Systems Inc. (Nasdaq: CSCO), with a number of survey respondents (all of whom were guaranteed anonymity) suggesting that the IP giant might be interested in Nortel's well regarded optical assets. (See Nortel Rolls On With 40-Gig and Nortel Intros 40 Gig, 100 Gig.)

Other suggestions made by multiple respondents include Ericsson, private equity (specifically from the Middle East), and, second only to Huawei, "no one."

Interesting suggestions that received only one or two mentions from respondents include Google (Nasdaq: GOOG), the Canadian government (a somewhat topical response!), and Infinera Corp. (Nasdaq: INFN).

Check out the full results in the table below, and, of course, we encourage any further suggestions or comments on the message board at the foot of this page.

Table 1: Who Might Buy Nortel's Metro Ethernet Networks Division?
Respondent suggestion* Number of survey respondents making this suggestion
Huawei 18
No one 9
Cisco 5
Ericsson 3
Private equity 3
Alcatel-Lucent 2
Extreme Networks 2
Fujitsu 2
Google 2
Juniper 2
ADVA (as a merger) 1
Canadian government 1
Ciena 1
Force10 1
Infinera 1
NEC 1
Nokia Siemens Networks 1
Sycamore Networks 1
Spinoff 1
Tellabs 1
Wal-Mart 1
Xtera 1
ZTE 1
* 44 respondents were asked their opinions on who might acquire Nortel's MEN division; no options were provided, all suggestions initiated by respondents.




— Ray Le Maistre, International News Editor, Light Reading

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lite-brite 12/5/2012 | 3:30:55 PM
re: Huawei Seen as Likely Nortel Suitor It would HAVE to be CSCO, secure in the knowledge that if they made the wrong decision, the government would bail them out:-(
lite-brite 12/5/2012 | 3:30:55 PM
re: Huawei Seen as Likely Nortel Suitor 'Tomorrow I shall write a column that makes the same argument for Wal-Mart. We'll see what happens.'

No one would read it Phil, lol. Put Ray's name on it! (Just kidding buddy!)
bollocks187 12/5/2012 | 3:30:48 PM
re: Huawei Seen as Likely Nortel Suitor Nortel management team and investors need to carefully way the risks associated with this move of selling off assets !

net is Nortel is still a brand name that is recognized with cusotmers. Huawei is a GOVT back communist company that brings absolutley NO vlaue to Canadians or Americans alike.

We live in a time where people are scared to ride out the storm and look for easy bailouts by selling off assets.

Just don't do it... I say. Nortel can and will come back it does not need the assistance of the chinese to do this. It needs management leadership.

Nortel made a HUGE mistake when it sold off its access gear - becuase of some stupid management decision - perhaps they need to get ride of the morons that are still political hiding in the system.



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