NORTEL TAKES STEPS TO SELL CHUNKS OF THEIR BUSINESS
June 28, 2009
Tags: Comment, Communications, News, Telecommunications
As reported in Comms Dealer magazine and other media recently, Nortel is in advanced negotiations to sell some of its business units. The deal to sell its mobile/wireless business to Nokia Siemens Networks for $650 m could trigger the sale of the rest of the company. “Many suitors have been knocking at our doors,” said a Senior Executive for Nortel in Ottawa. “We have to recognise the realities that we are in.”
According to speculation Nortel is about to sell its enterprise systems unit, which makes network equipment for businesses and other organisations, for about $500 m. The favoured bidder is thought to be Avaya, the already privately owned company that was spun out of Lucent Technologies in 2000, which in turn was spun out of AT&T in 1996. Some observers note that Siemens Enterprise Communications could emerge as the buyer if Avaya pulls out. I personally think that this is unlikely unless Siemens have had a major change of heart, as not so long ago rumours circulated that they were trying to sell the fixed line communications systems business.
Nortel’s demise has come about after years of poor performance, financial scandal and lack of focus on its core businesses. Partners have often been forced to form allegiances with other companies with better channel models and clear go to market strategies.
Siemens sold 51% of SEN to Gores Group last year and are now run as a separate joint venture by Gores Group consisting of SEn, Enterasys Networks and SER who provide key software components to Nortel. Therefore the comment about Siemens having a change of heart is somewhat out of date.
Money is already set aside by both Siemens and Gores for further acquisitions.
Looks as though the deal is going to go through as I expected, subject to approval of the authorities. I thought that it was interesting that Avaya was sold to private equity in 2006 for $8.2 Billion and it looks as though Avaya will bag Nortel for £915 Million, about 3 years later. Another sign of the economic climate we are in.