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Nortel Keeps Market Guessing, Will It Sell or Slim Down?

logo_purpleLike any celebrity coyly letting the tabloids speculate about the status of her relationship, the bankrupt Nortel (s NT) seems to have the business press all aflutter with news that instead of emerging from bankruptcy, the company may break up its business. The Wall Street Journal says the Canadian telecommunications gear maker is considering selling its core wirelesss gear business, which generates the most cash. Nokia Siemens Networks (s NOK) (s SI) is listed as a potential bidder.

Nortel, which filed for bankruptcy in January, may also sell its enterprise business, and it already has signed an agreement to sell its wireless area network optimization business. If Nortel finds willing buyers to help it raise the cash to pay off its $4.5 billion in debts, and the bankruptcy court approves those sales, then it’s possible Nortel will liquidate rather than emerge as a “leaner and more competitive company,” as CEO Mike Zafirovski has promised.

But wait! Two-thirds of the way down in the Journal story we are treated to the company’s coyness in a paragraph that reads:

Nortel’s fate isn’t yet clear. Concluding that the company is headed toward liquidation “would be very premature,” a person close to Nortel said, adding that the sale of the two units wouldn’t necessarily trigger a liquidation. Nortel’s board will meet next week to review management’s business plan for emerging from bankruptcy proceedings, the person said.

My guess is they want to keep the speculation going in hopes of getting the best possible prices for these assets. After all, once a company says it is going out of business the suitors hoping for a piece of the business quickly become vultures angling for the best price.

10 Responses to “Nortel Keeps Market Guessing, Will It Sell or Slim Down?”

  1. Another one bites the dust!
    50+ yrs of rich technology legacy..gone in 4 yrs. Senior leadership caliber matters so much for these turnarounds to work You need somebody who can move the needle on staying operationally nimble and yet move fast to identify adjacent technology markets or alternative business models; Mike Z9CEO) could do neither…he ended up hiring more people like him and results are obvious.

    Mike Z introduced all sorts of Six Sigma operational and process overhead instead of committing to product innovation. No point trying to make your gills more efficient if your pond is drying up fast…..

  2. adsforall

    No need for Nortel! it does not have any advantage in the market place except for the optical side. All remaining solutions are outdated and will be obsolete soon!

  3. RamblingFish

    Nortel ceasing to exist is a forgone conclusion. What remains to be seen is how much the executives and Board of Directors torment the shareholders, employees, pensioners, debtholders, and watchers. I’ll take wagers that their Wirless business is sold, the Enterprise business is sold, and that the MEN and Carrier Voice businesses are what emerge as the new Nortel. within 24 months thereafter, the new Nortel will be acquired or will re-enter chapter 11. They should save the stress, and sell it all now.

  4. Nortel’s value, at this point, is with its Carling R&D lab in Ottawa. Any chance of reclaiming wireless business is long gone (sell it to NSN, a good deal for all). Huawei needs entry into the US markets and the Ethernet/Optical business could be a good target. Cisco could also benefit from the Meridian installed base to excel its IP/pbx/ip phone business and some good engineers next to Cisco’s own campus in RTP. So what’s left? It’s R&D lab. Lucent should buy them and marry the Bell Lab people on Murray Hill. After that, no more Nortel.