Nortel Metro Ethernet Networks assets: Why no sale?

Eve Griliches/IDC
16 Sep 2009
00:00

 
Potential buyers for Nortel's MEN unit

Let's go through the potential suitors and the benefits and issues of each potential acquisition. But first we have to note the possibility that the Nortel MEN assets will never being purchased at all. That's looking more likely than ever, as sad as that may be. But on to the suitors, from the most to the least likely:

Ericsson: would gain potential North American wireline customers like Verizon and AT&T, where the older Marconi equipment has not been able to operate because it supports SDH rather than SONET. Ericsson could also benefit from the service and support of all the Nortel MEN equipment that's already installed with their strong services play. While Ericsson has yet to make a bid to date, it is likely to participate in the bidding process. A negative to the purchase is the overlapping optical equipment with Marconi.

Fujitsu would be the perfect companion for Nortel's MEN. Both companies are extremely technical, have fostered vertical integration and have a base in Dallas. Fujitsu's metro WDM products are well ingratiated in North American operators, and the Nortel long-haul product would be a terrific one-two punch for them. Unfortunately, Fujitsu's optical base is in North America, and decisions like this must be made in Japan.

Cisco would be a likely candidate because of its large enterprise installed base, while Nortel has actually sold lots of optical equipment to the U.S. government, as well as the high-end verticals. The acquisition would also give Cisco increased credibility in optical and place the company squarely in the position to respond to the Verizon RFP for packet optical long haul which came out recently. But John Chambers abhors low-margin businesses, so while we know Cisco has done extensive due diligence, it is unlikely the optical group will get the approval from above.

More on Nortel assets sale:

Avaya wins Nortel enterprise unit for $915m

LG-Nortel JV dissolving but who is buying?

Eve Griliches is a program director within IDC's telecommunications equipment group
This article originally appeared on SearchTelecom.com
 

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