FAQ: What's Going on with Nortel?
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.
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.
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What will happen to Nortel's enterprise customers?
The purchaser of the company's enterprise unit will likely work hard to hold onto it. Radware bought Nortel's application switching business in February and has announced five-year technical support for the Nortel gear. It plans to upgrade the equipment, integrate it into the Radware management platform and has laid out a road map for merging Radware and Nortel product lines. Expect something similar from whoever buys the enterprise gear.
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 other divisions are up for sale?
Nortel has units for core carrier VoIP and time-division multiplexing gear and metro Ethernet equipment. The company shopped around the metro Ethernet segment last fall but took it off the market again this spring after it couldn't find a buyer.
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.
Who is likely to bid on the other carrier business?
