x
Optical/IP

Is Huawei Moving Closer to Nortel?

Here's one that'll set tongues wagging.

Huawei Technologies Co. Ltd. is believed to be sizing up some office space in Kanata, Ontario, just down the road from Nortel Networks Ltd. 's major Ottawa Campus, according to a report by the Ottawa Business Journal.

What could this mean? Is Huawei sending in a local negotiating team to discuss the potential acquisition of Nortel's optical and carrier Ethernet business? (See Huawei Seen as Likely Nortel Suitor.)

Or is the Chinese vendor looking to pick up some local talent? (See Nortel Culls 1,300 Jobs, Loses $3.4B.)

Huawei isn't sharing its thoughts on any of these matters and says it won't comment on "real estate speculation." Nortel, likewise, isn't providing any update on the potential sale of its Metro Ethernet Networks group.

Industry speculation suggests Nortel has received a few tentative offers ranging between $350 million and $500 million, but deemed the offers too low. The main names still in the frame, according to Light Reading sources, are Huawei and Ericsson AB (Nasdaq: ERIC).

Nortel, which has attracted much media attention of late as it implements its new financial strategy, currently carries a market capitalization of $159 million, as its stock is trading at just $0.32. (See Nortel's Not Bankrupt Yet, NYSE Warns Nortel, and Nortel Woes Update.)

One thing for sure is that Huawei is looking to forge relationships with Canadian organizations. On November 25 the Canadian Advanced Technology Alliance (CATA) issued a press release (now, strangely, no longer available on its Website) stating that Huawei is "seeking to identify collaboration opportunities in Canada."

Huawei is looking to strengthen "R&D cooperation with Canada’s universities and companies. In particular, long term partnerships are being sought with universities and institutes engaged in advancing in wireless communication research and communications."

Among Huawei's stated "areas of interest" are: Intermediate frequency and radio frequency technology; baseband technology; MIMO (multiple-input/multiple-output) and AAS (adaptive antenna system); mobile communication chipset design (e.g., ASIC, FPGA); and test equipment and test technology for wireless access networks.

The Alliance, which is set to manage and forward on any expressions of interest from Canadian organizations, did not return our calls for comment.

— Ray Le Maistre, International News Editor, Light Reading

paolo.franzoi 12/5/2012 | 4:14:45 PM
re: Is Huawei Moving Closer to Nortel?
From the second link:

"At the $30-50 million price, he values the transaction at about 0.5-0.7 times Nortel's 2008 sales. Taking into account a steep decline in NortelGÇÖs business recently, the figure may actually be closer to the total 2009 estimated sales. He notes that Radware itself is trading at about its estimated 2009 sales."

What? I thought we were talking about a $2B division. A $50M price tag puts this not at 1/2 of sales but 1/40th.

seven
Pete Baldwin 12/5/2012 | 4:14:45 PM
re: Is Huawei Moving Closer to Nortel? Publication Globes out of Israel says Radware wants the Nortel MEN division:

http://www.globes.co.il/servee...
and
http://www.globes.co.il/servee...

Reported price $30M to $50M. Ouch.
Pete Baldwin 12/5/2012 | 4:14:42 PM
re: Is Huawei Moving Closer to Nortel? The numbers do look odd, and I find myself wondering if the source in the story was referring to some other chunk of Nortel, not MEN.

In any event, Nortel stock is up 23% today, apparently on the news. (Unless there's something else I'm missing; I'm just waking up here today.) Radware is up 2%, fwiw.
Pete Baldwin 12/5/2012 | 4:14:41 PM
re: Is Huawei Moving Closer to Nortel? Actually it's been pointed out to me that if Nortel were worth that little ($30M for MEN), the stock ought to go down. Something else must be up. (It can't be Lenovo/web.alive driving the stock, can it?)
grunt 12/5/2012 | 4:14:40 PM
re: Is Huawei Moving Closer to Nortel? Its just a small part of MEN right?
"Nortel's application networking business"

So I think they are saying the $30-$50M is .5 to .7 of sales of just that portion of the business - the part Rad wants to buy and put out of its misery...

So I guess they are saying Rad is valued 1:1 so should this business be about 1:1 instead of .6:1 and the counter to that is with the sales decline it might still be 1:1 for Nortels side of the deal...
grunt 12/5/2012 | 4:14:40 PM
re: Is Huawei Moving Closer to Nortel? Its just a small part of MEN right?
"Nortel's application networking business"

So I think they are saying the $30-$50M is .5 to .7 of sales of just that portion of the business - the part Rad wants to buy and put out of its misery...

So I guess they are saying Rad is valued 1:1 so should this business be about 1:1 instead of .6:1 and the counter to that is with the sales decline it might still be 1:1 for Nortels side of the deal...
digits 12/5/2012 | 3:24:58 PM
re: Is Huawei Moving Closer to Nortel? The Globe & Mail adds Cisco and Nokia Siemens to the list of credible bidders, and reports that further assets may go on the block.

http://www.theglobeandmail.com...

HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE