The Liquidation of Nortel Begins

June 21st, 2009 by · Leave a Comment

Well, they’ve finally given up all pretense of restructuring Nortel.  Late Friday the company announced that it would sell its CDMA and LTE infrastructure business to Nokia Siemens  for $650M.  The company has also expressed confidence that they can sell the other business units quickly, as in ‘weeks or months’.  So now the bidding war officially begins.  It may be an ‘orderly sale’, but nevertheless everything must go.  That would include the GSM wireless, enterprise networking, and metro Ethernet units, amongst other bits and pieces.  Who will buy them?  With the credit markets apparently thawing a bit, the list of potential buyers is probably longer than it was a month or two ago.  The telecom equipment sector has been battered in this slowdown with revenues taking big hits, but many of the companies have healthy balance sheets.  It should be interesting to watch who pops out of the woodwork.

So by 2010 we could be living in a Nortel-free world.  That is certainly not a cause for celebration in Canada where it was one of the truly dominant features of the telecommunications landscape for over a century.  While jobs were obviously being lost already, a restructuring plan that would keep the core of the company in place would have given more certainty to those left.  But under a liquidation, many of the buyers may be buying product lines and customers moreso than facilities, personnel, and expertise.  In other words, for Nortel’s creditors the future may have gotten a bit easier to project, but for employees the visibility just got worse.  Good luck out there, guys.

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Categories: Financials · Telecom Equipment

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