Nortel Sells Off Wireless Assets for $650M
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Nortel Networks is set to soon be no more.
The embattled telecom equipment provider announced late Friday that it had entered into a preliminary agreement to sell its wireless assets to Nokia Siemens Networks for $650 million.
Nortel has been in bankruptcy protection since January.
With the announcement of the wireless sale, expected to close in the third quarter of 2009, Nortel also reported that it is planning to sell the rest of its assets as well, meaning the company will likely not emerge out of bankruptcy restructuring.
"Nortel confirmed that it is in advanced discussions to sell all of its business units, including Enterprise Solutions," a Nortel spokesperson said in an e-mail to InternetNews.com. "We believe that the best outcome for each of these businesses is to find buyers who can carry Nortel's rich innovation platforms into the future, but we will assess other restructuring alternatives for these businesses in the event we're unable to maximize value through a sale."
The sale to Nokia Siemens will include Nortel's CDMA and Long-Term Evolution (LTE) wireless technologies.
According to Nortel, the deal also specifies that 2,500 employees of Nortel's wireless division will be able to move over Nokia Siemens once the deal is closed. Nortel said in a statement that the 2,500 employee figure, "represents a significant portion of the employees associated with the assets being sold."
Since Nortel is currently in bankruptcy protection, the deal with Nokia Siemens is what is known as a "stalking horse" asset sale, which means that other bidders could potentially outbid Nokia Siemens for the wireless assets.
Nortel's spokesperson said that with such an agreement, Nokia Siemens has effectively set the floor price for the auction.
"While the Asset Purchase Agreement is subject to the bids of other industry suitors for the business, the 'Stalking Horse' bidder also has the right to increase their price in the event other companies make competing offers," Nortel's spokesperson said. "Together, the sale includes substantially all of the CDMA, and LTE assets, including intellectual property, research and development, existing inventory, and the assumption of all customer and partner relationships."
The wireless asset sale will be the second "stalking horse" sale to date for Nortel under its bankruptcy protection. In April, Nortel sold off its Alteon application networking gear to Radware for $18 million.
Though it has been under bankruptcy protection for all of 2009, Nortel has made some new enterprise product announcements this year. In May, Nortel's networking division rolled out a new core networking virtual services platform, a new secure router platform and a new Unified Communications management solution.
Nortel's carrier business also has been making some news this year. In June, Nortel reported that its softswitch business was still thriving, with a 59.1 percent market share by revenue in North America.
Nortel has been in a long decline following the dot-com bubble burst and an accounting scandal that eroded investor confidence in the company.
The current global recession has also hit Nortel hard. For the first quarter of 2009 the company reported a loss of $507 million.