Report: Nortel in talks to sell off major business units
Nortel is in talks to sell its core wireless equipment business, as well as a separate unit that builds telecom systems for offices, according to The Wall Street Journal, citing anonymous sources.
The Journal reported that Avaya and Siemens Enterprise Communications were two of the companies that have held talks with Nortel. Cisco Systems reportedly looked at the enterprise unit but wasn’t expected to bid.
Nortel, which filed for protection from creditors in January, released disastrous fourth-quarter earnings at the beginning of March, reporting $2.1 billion in losses. Concurrent with the earnings report, Pavi Binning, the company’s CFO, was appointed to the role of chief restructuring officer.
Mike Zafirovski, Nortel’s president and CEO, has continued to stress that the company is restructuring in an effort to move forward. "Work is taking place across Nortel to develop a comprehensive plan to restructure Nortel into a more focused, leaner and more competitive company," stated Zafirovski in the most recent earnings report. The plan is reportedly due out by April or May upon approval from creditors.
Analysts wonder what will be left if Nortel sells off its two main components – wireless equipment and office telecom systems.
“Nortel was flying high and they really self-destructed,” says Roger Entner, senior vice president of communications for the Nielsen Company. “If anything is left, it won’t be even a shadow of the original company. It might exist in name only.”
Nortel recently asked a judge to cancel 175 room reservations at Caesar’s Palace in Las Vegas that the company had booked for CTIA. The reservations included a lavish penthouse suite that went for a whopping $2,300 a night. Nortel drew criticism for having made the reservations while planning to file for protection from creditors.