Posts Tagged ‘Nortel’
To the surprise of no one, Nortel CEO Mike Zafirovski has departed his sinking ship, just before the final pieces of the wreckage are sold off to the highest bidder. He leaves “at a natural transition point” as the company is broken apart in bankruptcy and it reports double the losses it had last quarter, due in part to reorg costs.
Z blames the final disaster on the economic crisis, but that is a easy way out for poor marketing decisions and failing to trim costs sooner.
Ericsson announced its interest in Nortel’s wireless assets late, but it came home the winner, paying $1.13 billion for Nortel’s LTE and legacy CDMA business. The deal will likely almost double Ericsson’s revenues in North America over the short term; Nortel’s CDMA operation ran at about $2 billion last year as compared to Ericsson’s $2.7 billion in North America for the same time period.
As a part of the deal, Ericsson is expected to offer about 2,500 former Nortel employees jobs. Ericsson says it is getting the assets debt free, so life is good.
Nokia Siemens Networks and vulture capital firm MatlinPatterson had also put in bids. NSN had reportedly put up a $650 million bid as a stalking horse offer while MatlinPatterson had offered $725 million.
Wall Street analysts view both the deal and the price offered by Ericsson as a good deal, describing the former wireless unit as “very profitable.” They also view the CDMA purchase as a bootstrap for LTE business as customers migrate off the older technology onto (shiny new) Ericsson gear.
Nortel’s fire sale starts today
Posted on: July 24, 2009
Nortel’s CDMA and LTE wireless assets are first up on the block today. The good news for Nortel is 1) There are multiple bidders and 2) The price tag seems to go up every time someone issues a press release.
Nokia Siemens Networks, Research in Motion, Ericsson, and MatlinPatterson have all made offers in some form. NSN put out a “stalking horse” of $650 million and suggested it might raise the offer. RIM got turned away despite offering $1.1 billion, which is now causing some consternation in Canadian government circles since purchase by Sugar Daddy BlackBerry would have kept Nortel assets and jobs all-Canadian. Ericsson has offered up $730 million, just beating MatlinPatterson’s $725 million bid.
It will be interesting to see with who ends up with what when the smoke clears. And RIM’s political posturing is likely to further complicate the process of any winning bid.
Nortel and RIM – WTF?
Posted on: July 22, 2009
BlackBerry daddy Research in Motion (RIM) wanted to put in a $1.1 billion bid for Nortel assets, but walked away from the deal when Nortel put too many conditions on the deal. Seriously, what is wrong with this picture? A) Nortel dictating terms to anyone offering $1.1 billion (Canadian, US, whatever, a billion is a lot of money). B) RIM bidding for Nortel wireless assets or C) All of the above.
I’m leaning towards C) at the moment.
From a Canadian nationalistic standpoint, I get that RIM was bidding on Nortel’s wireless business, but I’m not sure that paying $1.1 billion U.S. for CDMA and LTE assets isn’t overkill, since the next closest bids were in the $600-$750 million range. RIM was told if could be qualified only if it promised not to submit offers for other Nortel assets for a period of one year — in other words, after the rest of the company had been sold off in bits and pieces around the globe.
It looked like RIM wanted to Do The Right Thing (apologies to Spike Lee) and keep ownership of Nortel assets in the Great White North, but it would have put RIM into a business of wireless infrastructure rather than end user devices. It would have been a big bold leap for RIM.
Ah well, bidding for the pieces of Nortel’s corpse closes out on Friday, so we’ll have to see what happens between now and then.
Avaya and Aastra have made separate moves to get into the Nortel bankruptcy circus. Avaya is offering cash for assets, while Aastra will offer migration incentives (i.e. a sale) to get customers to switch.
In a press release today, Avaya announced it has signed agreements to pick up Nortel’s enterprise solution business for $475 million. The acquisition includes Nortel’s Enterprise Solutions voice, data and government systems businesses, but the transaction awaits clearing a competitive bidding process and approval by bankruptcy courts in Delaware and Ontario.
Avaya gets to scale a bit, expand its channel partner network, and add to its portfolio of products and services. Nortel gets cash to pay off its creditors and some of its employees will land as Avaya employees. Bell Canada and BT praised the move and BT went so far as to say it would “expand” its engagement with Avaya over the next year to offer a full unified communications portfolio.
Aastra’s move is less concrete, more ambulance-chasing. For “a limited time” Aastra says it will offer “extraordinary incentives” to get Nortel large enterprise customers to move to its Clearspan UC solution. Discounts include free unlimited numbers of SIP integration trunks, “significant” discounts on Aastra 67ix SIP phones, free instructor-lead training for admins during the first year of deployment (up to 2 students per class) and free end user, web-based training for an unlimited number of users during the first two years of deployment.
Aastra says that a 3,000 user enterprise deploying 300 SIP integration trunks and 1500 new SIP phones to users can save $500,000.
Billy Mays, you passed too soon, my friend. You could have made some serious coin off someone looking to rob Nortel of its customer base…
Lost in the chaos last week, the London Organising Committee of the Olympic Games and Paralympic Games (LOCOG) uncerimonously dumped Nortel as its “Official Network Infrastructure Partner” for the London 2012 Olympic and Paralympic Games. Never fear, Cisco is here!
LOCOG cited the pending dissolution of Nortel in bankruptcy court as the primary reason; the company diminished value as its pieces disappear, so LOCOG and Nortel “amicably” (i.e. polietly) decided to end the agreement.
Needless to say, Cisco was waiting in the wings and was more than happy to throw in a bid for the infrastructure contract and became the new Official Network Infrastructure Supporter for London 2012 in a tier two deal starting immediately.
For now, Nortel continues in the driver’s seat for the Vancouver 2010 Winter Games, but it remains to be seen if said event will be Nortel’s last call before its pieces and brand are scattered to the winds.
News reports across the wire are repeating comments by a Nokia Siemens Network (NSN) official who said the company might bid on other Nortel assets as they become available. Meanwhile, vulture capital firm MaitlinPatterson Global Advisors is proportedly building a “dream team” of executives to advise on reorganizing and running Nortel if it wins its bid for the firm.
The Financial Times reports MaitlinPatterson’s team includes former Nortel North American President Dion Joannou, Richard Burns, a former president of AT&T’s wireless network, Richard Piasentin, a former group vice-president of sales for Nortel, Tony Pirih, former head of Nortel’s R&D operations, and Chris Smith, former executive vice-president in charge of Alltel’s network operations.
Meanwhile, Seeking Alpha comments on NSN North American president Sue Spradley standing center stage touting why her company is the best one to acquire Nortel’s CDMA and LTE parts. Speaking in Toronto yesterday, Spradley indicated that NSN could put more money on the table for the pieces if it’s needed to stay in the bid process; doing so would make it the #2 network supplier in North America, ahead of Ericsson.
Once NSN gets the CDMA and LTE pieces, it will look at other Nortel assets as they come to market and if it sees a good price for them, it’ll grab them.
There’s some interesting micro and macro factors illustrated in these comments. Micro: NSN is not backing down for what it wants and it will be interesting to see if it and MaitlinPatterson cut a deal either before bidding closes or, if Maitlin ends up with all of Nortel, afterward. And if you’re looking for a good signal of an economic leveling, the potential for NSN and MaitlinPatterson to duke it over Nortel’s assets could qualify.
Is Nortel ready to fall lower?
Posted on: July 13, 2009
Last week, Nortel was too busy pimping its own assets rather than talking about the future of the company, reports Wireless Week. With July 21 looming as the final date to bid on Nortel assets, a little panic may be setting in.
A Nortel event last week was supposed to be a discussion on the “realities of the current CDMA market,” but after the presentation ABI Research analyst Nadine Manjaro asked if the company had dragged her in for a sales pitch. Manjaro believes that Nortel is “rushing” to get higher bidder in play.
Currently, the only public bid is a $650 million offer from Nokia Siemens Networks, with “vulture capitalist” firm and Nortel creditor MatlinPatterson also making noises it’s going to make a bid for the whole company. Nortel officials are playing cute, hinting of other bidders, but if that’s so, why is the company trying to pump the future of its assets?
We’ll all find out more at the end of the month, when the identities of the bidders will become public. At this rate, MetaSwitch might as well throw in a low-ball bid for Nortel’s VoIP assets just to make ‘em sweat.
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NSN’s Low Bid Causing Strain at Nortel? By Maisie Ramsay WirelessWeek – July 10, 2009 The deadline to bid on Nortel’s assets is less than three weeks away, and it appears the company is starting to sweat a little. Yesterday, Nortel held an hour-long conference that sounded suspiciously like a sales pitch for its CDMA assets. The company’s press invitation for the conference had touted the call as a discussion of the “realities of the current CDMA market” within the context of Nortel’s pending sale of its wireless assets. But the company spent the bulk of the call pointing out just how monetizable its assets were. By the end of it, ABI Research analyst Nadine Manjaro piped up to ask if the company had dragged her there for a sales pitch. Nortel representatives replied, in part, that the call would help build sales momentum for the company that eventually acquires it. Manjaro has a different take: She thinks Nortel is rushing to get higher bidders in before the company goes on the auction block on July 24. “The Nortel call today was to tout Nortel’s true value, which will potentially increase bidders,” she says. “All of the recent press has been more on the negative side so it was an effort to say that even though the company is going through bankruptcy, the assets are still valuable.” So far, the only public bid has been a paltry $650 million from Nokia Siemens Networks. Nortel creditor MatlinPatterson also has said it will bid on the company, but it has yet to submit a proposal. Despite the conference call’s note of desperation, Nortel’s wireless marketing vice president Bruce Gustafson hinted to Wireless Week that there were more offers in the wings. “If you’re assuming there are no additional bids because there’s no public disclosure, you’d be mistaken,” he said, declining to name other bidders. The industry may have to wait until the end of the month to see if Nortel’s last-minute sales pitch was effective. On July 21, all bids for the company have to be submitted and the identities of the bidders will become public. Nortel will be at auction three days later, and its new owner will emerge once approval is given by the bankruptcy court.
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The bidding for the corpse and pieces of Nortel has gotten more interesting. The Ottawa Citizen reports “vulture fund” MatlinPatterson Global Advisors is making a play for Nortel. It couldn’t convince a U.S. bankruptcy court for an extension to the bidding process of Nortel wireless assets to Nokia Siemens Networks (NSN), however.
MatlinPatterson wanted a 15 day extension to formalize a bid. Instead, the company must put together something by July 21 for an auction being held on July 24 with NSN currently the only bidder. NSN and Nortel were hoping to close a sale on July 29.
With about $400 million – about 10 percent of Nortel debt – in Nortel bonds, Matlin feels that Nortel is worth more than the quick bidders believe, with cash reserves of $2.7 billion (U.S.), and notes the company has made $220 million since filing Chapter 11 in January.
However, NSN won’t get a free ride. The bankruptcy court ruled that NSN has to top competing bids to win the wireless assets and has made changes to the bidding process to allow options such as the reorganization of Nortel and the sale of all assets.
Be interesting to see if NSN holds course and what kind of cards Matlin might put on the table by July 21.
Nortel’s asset fire sale “could possibly gut” its 3 year UC partnership with Microsoft, Network World says. Uh, yah think? Given that HP and Microsoft swore to be friends and jointly invest up to $180 million at InterOp last month, I’d say both companies are in splitsville.
Back in 2006, Nortel and Microsoft rolled out a four year plan called the Innovative Communications Alliance (ICA), designed to jointly develop and sell UC and VoIP technology to enterprise customers. Nortel brought the phone knowledge, some middleware, and its installed base while Microsoft brought Office Communications Server (OCS) and its brand name.
Sale of Nortel’s various assets and divisions could leave the ICA partnership without Nortel’s IP PBX platform, engineers working with Nortel on joint products, and – probably the biggest loss – Nortel Global Services, the consulting arm for ICA.
Nortel CEO Mike Zafirovski predicted the partnership would generate $1 billion in revenue, but by 2008 Nortel was reporting a $3.4 million loss on the effort.
Avaya may pick up Nortel’s UC business for $500 million, one of Canada’s papers is reporting. If this takes place, Avaya would overlap with its UC own products AND Microsoft has a UC partnership with Avaya, leaving everyone guessing as to what redundancies would be chopped.
If Nortel Global Services goes out the door in the next wave of asset divestment, so does support for Microsoft’s UC try-it program for customers.
(Of course, this doeth beg the question why Microsoft isn’t putting down some cash to pick up some assets on the cheap, but it might be too busy with Bing to care…)
Besides, Microsoft and HP are already cozy with their own four year (hmm, where’d that come from?) “strategic global initiative” to deliver an end-to-end UC and collaboration solution, with the two companies earmarking up to $180 million in “product development, professional services, as well as joint sales and marketing, to help organizations lower costs and improve productivity.”
Further down the HP press release, there’s a lot of nice bullet points about how HP will have a dedicated team of service professionals (like they had with Nortel), as well as work with communication service providers for hosting solutions for SMBs (Like they did with Nortel).
