Nortel could break up by selling business units rather than restructure

Posted March 12, 2009

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— Troubled Nortel Networks may be headed toward a breakup and sell-off rather than a restructuring under bankruptcy protection, two news organizations reported Thursday.

Citing unnamed sources, the Globe and Mail in Toronto and The Wall Street Journal say that Nortel, which employs some 2,000 people in the Triangle area, is discussing sale of two core business units.

“Nortel Networks Corp. is looking to break itself up by selling off major divisions rather than trying to rebuild itself under bankruptcy protection,”
the Toronto newspaper said of the company, which is based in Canada.

If the sales were to take place, the Journal said Nortel would “break itself apart.”

Nortel could sell its wireless equipment business and another unit that manufactures telecommunications systems for offices. The two groups were responsible for some $6.7 billion in sales in 2008 and generated more than half of Nortel’s revenues last year, the Globe and Mail noted.

Approval by bankruptcy judges in Canada and the United States would be required for any sale.

"There is a process under way," one person familiar with the discussions told the Toronto newspaper.

"The consensus all along was that it would be carved up," another person familiar with the discussions told the Toronto newspaper.

The Journal, meanwhile, quoted a source as saying, "What we are finding is that there may be a lot more value by selling rather than emerging. … The company was surprised by the amount of interest and the number of calls."

Nortel declined comment for the papers' stories.

"We've indicated in the past that we're going to build a plan and that once we have that plan in place, we're going to present it to the courts," Nortel spokesperson Mohammed Nakhooda told the Globe and Mail on Wednesday night. "Right now, we're in the early stages of building that plan, but we're making progress. Time is obviously of the essence and we're moving as quickly as we can with speed and purpose."

Potential buyers include Avaya and Siemens Enterprise Communications.
Cisco Systems reportedly was interested in buying some Nortel assets but did not enter a bid, the Globe and Mail and the Journal both said.

Nortel recently announced plans to lay off 3,200 employees as part of the restructuring.


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  • dws Mar 12, 2009

    "it'll be interesting to see how much of a golden parachute the executives try to arrange for themselves..."
    they deserve boat anchors

  • iron fist Mar 12, 2009

    How will this help the workers who were laid off and lost benefits, retirement etc.

  • dta27615 Mar 12, 2009

    it'll be interesting to see how much of a golden parachute the executives try to arrange for themselves...

  • oyid Mar 12, 2009

    Where do these guys get there MBAs? I'm talking about the Executive Team that dragged their foot on for several years just to arrive at this point. Break-up already!

  • ckblackm Mar 12, 2009

    Maybe by selling off, they'd find someone who could take care of it's employees better than it did. Too bad it's too late for shareholders.