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Nortel to liquidate assets

22 июня 2009

Nortel Networks, the Canadian telecommunications equipment manufacturer operating under bankruptcy court protection, is in advanced negotiations with potential buyers for its main business operations and is likely to announce further asset sales in “weeks or months, rather than months or years,” Mike Zafirovski, chief executive, said on Sunday.

Mr Zafirovski, speaking after the company announced late on Friday that it plans to sell its core profitable CDMA and LTE wireless infrastructure business to Nokia Siemens Networks for $650m, also expressed confidence that an “orderly sale” of Nortel’s businesses was a better and more realistic option for all stakeholders than attempting to reorganise the 127-year old company so that it could emerge from Chapter 11 bankruptcy protection.

While he said breaking the company up and selling it off piecemeal had “not been the original plan,” he said that Nortel, which filed for protection from its creditors in mid-January, “lacked the scale to compete” in the highly competitive global telecommunications equipment market against global groups such as Ericsson of Sweden, Alcatel Lucent and Nokia Siemens and their increasingly powerful Chinese rivals including Huawei.

The businesses that NSN is acquiring, part of Nortel’s profitable carrier division, employ about 2,500 people and have annual revenues of about $1.5bn.

Assuming the “stalking horse” deal is approved by the courts and completed, it would give NSN a much stronger footprint in the North American market and access to key customers including Sprint Nextel and Verizon Wireless, the wireless joint venture between Verizon Communications and Britain’s Vodafone group.

The two US companies are among Nortel’s biggest CDMA network equipment customers and Verizon Wireless in particular is a potential customer for Nortel’s next-generation LTE technology. Like other network operators, Sprint Nextel and Verizon Wireless are keen to encourage viable competition among potential suppliers and have both welcomed the proposed Nokia Siemens deal.

Mr Zafirovski has struggled to turn Nortel around after a series of accounting scandals earlier this decade brought the company to its knees at a time when the industry was consolidating and technological change had placed a premium on innovation.

On Sunday he said Nortel had at one time been a potential consolidator and had nearly done several significant acquisitions in recent years but that these fell apart at the last moment “for various reasons.”

As a result, he said, although Nortel had succeeded in improving its operational efficiency and customer service considerably in recent years and focused its R&D spending on new growth opportunities including LTE – the emerging 4G mobile network standard – it nevertheless lacked the scale to compete. When many of its biggest customers cut back capital spending in the face of the global economic downturn last year, Nortel had little choice but to seek bankruptcy protection.

The company, once Canada’s technology flagship carrier with a market capitalization of $250bn, put its main businesses, which include the rest of the carrier business including its GSM wireless operation, its enterprise networks business, metro Ethernet networking operations and its LG Nortel Korean joint venture, up for sale a few months ago. Mr Zafirovski said on Sunday that there were “between three and seven potential buyers for each of the businesses and “more for LG Nortel.”

Nortel’s 2,500 managers were briefed on the company’s plans over the weekend and will now hold meetings with Nortel’s remaining 25,000 employees – down from 90,000 before the internet and telecommunication crash at the start of the decade. Mr Zafirovski said on Sunday that he may hold a web conference for employees on Wednesday to explain his plans.


Источник: Financial Times

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