Tuesday, June 30, 2009

What's Going on with Nortel?

Wed, June 24, 2009 — Network World — With Nokia Siemens bidding on Nortel's wireless business and Avaya rumored to be grabbing up its enterprise gear, it is all but inevitable that the rest of company will be broken up and sold off in pieces, which raises questions. Here are some of them and the answers.

Who is likely to buy the enterprise business?

Reportedly, Avaya has put in a $500 million bid for the enterprise division, which sells switches, routers and telephony products. With its focus on enterprise VoIP and unified communications, the company could use Nortel enterprise infrastructure, which includes switches, security gear and phones. It would boost Avaya instantly into the No. 4 spot for Layer 2 and 3 Ethernet switching and give it entry into more corporate accounts.

What did Nokia Siemens bid on?

Nokia Siemens bid on the CMDA wireless business and the R&D unit working on LTE wireless.The company's technology overlaps with Nortel's, but that's OK because its customer base doesn't overlap as much. Both companies, for example, have CDMA and Long Term Evolution technology, but Nokia Siemens doesn't have anywhere near the penetration into North American carriers that Nortel has. If it closes the deal, Nokia Siemens will do everything it can to take advantage of Nortel's client list. Nokia Siemens says the deal would boost its share of the North American carrier market from less than 6% to more than 30%.

Beyond that, the business Nokia Siemens wants to buy netted $700 million last year, according to the Wall Street Journal. If it remains that profitable, that will pay off the $650 million purchase price in less than a year.

By Tim Greene

1 comment:

  1. It's the preverbial one person's loss is another's gain. Nortel built a credible global business. The economic crunch reeled in another victim. It's a pity that Nortel cannot capitalize on the luctrative business opportunity to be acquired by Nokia Siemens. Are they getting it at a give-away? Repaying $650 million in a year seems profitable beyond belief. It will be interesting to see which strategy Nokia Siemens will employ to retain the Nortel customers. One thing's for sure, Nokia Siemens will make this work.