More Nortel assets for sale says report

The sooner Nortel Networks concludes its fire sale of assets the better off existing customers of fallen Canadian telecom giant will be according to a technology industry analyst.

“As it is, Nortel clients or those considering telecom purchases are in limbo. Most have to put acquisition plans on hold because they’re not sure which products will remain supported, change or disappear,” said Andy Woyzbun, lead analyst at Info-Tech Research Group based in London, Ont.

The uncertainly resurfaced following reports that Nortel may sell off more of itself than previously announced, leaving very little as a core business if all the speculated sales go through.

The company is looking for buyers of its wireless equipment and enterprise telecom businesses, according to a report in the Wall Street Journal. Interested parties include Avaya, Siemens, Gores Group and Nokia Siemens, the report says.

“We are still in the process of developing a plan (as previously stated) that will in the best interests for our customers and stakeholders. When the plan is approved by the stakeholders and the court, we will communicate it,” Nortel said in a written statement.

However, “a comprehensive restructuring plan may result in additional sales or divestitures, but we can provide no assurance that we will be able to complete any sale or divestiture on acceptable terms or at all,” the company says in its annual report filing with the Security and Exchange Commission.

Nortel’s CEO Mike Zafirovski says he will reveal his plan for the company next month or in May.

Avaya says it doesn’t comment on rumors and speculation. The other possible buyers could not be reached before deadline for this story.

The Wall Street Journal report says that Nortel wants to sell off its enterprise division, but specifies only the telecom products. Nortel includes among product s in its Enterprise Solutions division unified communications, routing, switching, wireless LAN, security and contact centers. Siemens and Gores Group are mentioned as possibly interested, and Cisco is mentioned as having considering it but unlikely to bid.

“Dealing with these reports is a real challenge for companies that have invested substantially on Nortel technology,” said Info-Tech’s Woyzbun.

Some companies may have to face the reality that their investment has gone down the drain, if buyers of a Nortel division decide to discontinue the product they company deployed, he said. “Some customers will have to ask themselves:’ am I reasonably satisfied with the Nortel product I have or am I prepared to replace it?”

The analyst said it is uncertain at this point which Nortel product will survive, but buyers would be a good barometer.

“In all likelihood, what’s sold will be the better products than those that Nortel gets to keep,” Woyzbun said.

Early this year, Nortel decided to drop work on mobile WiMAX and focus on what’s called LTE as the next-generation broadband wireless technology.

The report also says Nortel is interested in selling wireless voice gear, which may be part of the Enterprise Services division. The report names Nokia Siemens as a possible interested purchaser.

Radware has already sought to buy Nortel’s application delivery unit for about US$18 million, which is based on equipment it bought when it purchased Alteon WebSystems in 2000. The products involved are Nortel Application Accelerators 510 and 610; Nortel Application Switches 3408E, 2424E, 2424 SSL E, 2216E, 2208E; and the Virtual Services Switch 5000.

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Jim Love, Chief Content Officer, IT World Canada

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