Sale of LTE & CDMA business to Nokia Siemens spells the end for Nortel

Stuart Corner
Sunday, 21 June 2009 08:13

Business IT - Technology

The largest remaining part is Nortel's enterprise telephony business and Avaya and Siemens Enterprise Solutions have been flagged as possible buyers. Last month Nortel announced the sale to Korea's LG Electronics of its stake in its 50:50 JV with LG, LG Nortel that makes IP telephony CPE.

The proposed sale to NSN is structured as a stalking horse agreement, which means that NSN's offer represents the initial bid in an auction for the assets being put up for sale. It enables Nortel to solicit higher bids from other potential buyers. Nortel will file the stalking horse asset sale agreement with the US Bankruptcy Court and the Ontario Superior Court of Justice seeking permission to initiate the auction.

This parrot is not dead!
Nortel president and CEO, Mike Zafirovski's comments on the deal smack of the infamous Monty Python dead parrot sketch - by maintaining a pretence that there is still life left in Nortel. "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," he said.

"This will ensure Nortel's strong assets - technologies, customer relationships, and employees - continue to play an important role in driving the future of communications. The value of Nortel's wireless business is recognized throughout the industry. The agreement we are announcing today is solid proof of that value and represents the best path forward for our other businesses."

Zafirovski added: "Nortel's employees are doing a tremendous job under challenging conditions, stabilizing our business and delivering outstanding service to our customers. It is important to provide our employees with a clear sense of direction around their future and potential opportunities with the new companies."

Although Nortel was severely battered by internal financial wrongdoings and the telco downturn in the early 2000s, many commentators have laid the blame for its slow and painful demise on the company's board. Network World quoted telecom consultant Iain Grant of the SeaBoard Group. Saying Nortel came out of the 2002-2003 meltdown with a viable company," he said in a Saturday morning interview. "But the board destroyed the value of the company by going through a series of witch hunts over the financial irregularities. " The job of the board is to safeguard the interests of shareholders and to keep the confidence in the company. They did neither and destroyed an iconic company."