Report: Cisco among 3 bidders for Nortel's Ethernet biz

Jim Duffy
09 Jan 2009

Nortel is reportedly entertaining bids from three companies, including Cisco, for its Metro Ethernet Networks business unit.

According to a report in the Canadian national newspaper Globe and Mail, companies most likely to bid on the US$2 billion business include Cisco, Huawei, Ericsson and Nokia Siemens. The article does not say which of those companies is not bidding.

Nortel earlier this year said it would seek buyers for MEN in an effort to raise cash to fund other businesses the company considers more strategic. Nortel is having trouble rebounding after an accounting fraud scandal in 2004, compounded by the current gloomy global economy.

Various analysts estimate that Nortel could fetch between $1 billion and $2 billion for MEN, though the current economic climate might lower that value.

The Globe and Mail story also says Nortel is looking to sell more assets instead of filing for bankruptcy. One of them might be the company's Carrier Networks business, Nortel's bedrock.

Selling off Carrier Networks would end the century-old relationship between Nortel and the telecommunications industry, the story notes. Nortel is North America's largest supplier of telephone equipment.

Nortel would then be left with its Enterprise and Services businesses, which include Ethernet switches, routers and unified communications software. Enterprise is about $2.5 billion annually to Nortel, while Services is a $2 billion operation.

Network World (US)

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