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07:51 PM
Fredric Paul
Fredric Paul
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Nortel Sale Portends Breakup, Impact On SMBs Still Unclear

The annnouncement of Nokia Siemens acquiring Nortel's CDMA, LTE assets for $650 million makes it clear that the company will be sold off in parts. But it sheds little light on the fate of the enterprise network equipment business group, which is what most small and midsize companies care about most.

The annnouncement of Nokia Siemens acquiring Nortel's CDMA, LTE assets for $650 million makes it clear that the company will be sold off in parts. But it sheds little light on the fate of the enterprise network equipment business group, which is what most small and midsize companies care about most.InformationWeek described the the parts that were sold as Nortel's "crown jewels," but they mostly make infrastructure equipment for telcos and other carriers, and thus don't directly affect the technology products that most businesses buy.

Still recoving from a nasty accounting scandal an up for sale for more than a year, Nortel is currently under bankruptcy protection that has made deals difficult to complete. There had been speculation that the company would be sold as a single entity, but Nortel also announced that it's trying sell the rest of its assets and delist trading in its shares.

On the other hand, as bMighty networking correspondent Paul Korzeniowski told me today, "No one is sure what will happen will all of other different business units at this stage."

That didn't stop speculators, of course. Reuters quoted analyst Duncan Stewart at DSAM Consulting in Toronto, saying the enterprise unit is the next logical candidate, for a price similar to today's announcement.

The Wall Street Journal said the sale sets a low bar for the rest of Nortel, and quoted Nortel CEO Mike Zafirovski that the company is in "advanced discussions to sell its remaining divisions," including the enterprise operation. The Journal identified those suitors as Avaya and Siemens Enterprise Communications. The expected price for the money losing unit has slid from $1 billion last year, the Journal said, to less than $500 million today.

If the enterprise unit sale doesn't happen, though, all bets are off. Nortel told Reuters that in that case, the company will "assess other restructuring alternatives," whatever that means.

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