Like 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.