Nortel Goes to Washington

Nortel Networks Corp. (NYSE/Toronto: NT) today signed a $448 million deal to acquire IT services firm PEC Solutions Inc. (Nasdaq: PECS) in an attempt to win a slice of the lucrative U.S. government market (see Nortel to Acquire PEC)

Based in Fairfax, Va., PEC Solutions provides a range of technology services to federal, state, and local governments in the United States. These include systems design, management, and even a portfolio of biometric security products.

It's quite a departure for Nortel, but it provides a big hint as to how the company sees itself growing after years of poor business in the telecom market -- and its own self-inflicted accounting problems.

Rebecca Segal, an analyst at IDC believes that this could, potentially, form the basis for a much broader services offering from Nortel, possibly even targeted at the enterprise.

"If this is a model that they could replicate, then it could be a way into the IT services industry," she says. "It depends on how much integration there is between PEC and Nortel."