Nortel: Is the CDMA Sale the Beginning of the End?

Five months after filing for bankruptcy protection, Nortel (NRTLQ.PK) made a major restructuring move by accepting a $650-million bid for its CDMA wireless business and its 400-person LTE R&D unit from Nokia Siemens (NOK, SI) .

The deal takes Nortel out of the wireless business only a few years after it played in both the CDMA and GSM markets. And it leaves Nortel with three major units: its carrier business, enterprise unit and metro Ethernet Network business.

In a press release, Nortel CEO Mike Zafirovski said:

Maximizing the value of our businesses in the face of a consolidating global market has been our most critical priority. We have determined the best way to do this is to find buyers for our businesses who can carry Nortel innovation forward, while preserving employment to the greatest extent possible. This will ensure Nortel’s strong assets - technologies, customer relationships, and employees - continue to play an important role in driving the future of communications.

The value of Nortel’s wireless business is recognized throughout the industry. The agreement we are announcing today is solid proof of that value and represents the best path forward for our other businesses.

Nokia Siemens have made a “stalking horse” bid for Nortel’s assets. This means Nortel is conducting an auction that opens the doors for higher bids. The deal will also need approval from the Canadian government.

Nortel also said it does not expect its common shareholders to get anything from the bankruptcy protection process. As a result, it will apply to delist its shares from the Toronto Stock Exchange. Trading of the shares (NT/TSE) is expected to be suspended on Monday with the consent of the monitor.

The timing of the announcement is somewhat strange given it’s Midsummer Eve in Finland, one of the biggest holidays of the year.

The question for Nortel now is whether the CDMA sale is the simply of the beginning of Nortel’s asset gutting. With one deal out of the way, is it only a matter of time before other major deals are consummated.

For more, check out the Wall St. Journal.

Comments

[serge9:]

well, it is amazing how Mike Z. can change direction change any promise he made, as easy as he does it with no problem, he said Nortel will become more leaner and more focused company, the just like that he said, it is all over, we are selling every thing, after all he got what he wanted, filled up his Pocket and achieved his main Goal on his hidden agenda which is to destroy Nortel for he benefits of others, he Play stupid , I had lost over 550,000.00 $ Canadian $ by following his promises and believing in what he said, and Now he requested that Nortel Shares Be Delisted from the TSX, trading has been halted and off course I loose every thing, while Z and his team are happy and laughing at stupid fools like me. Corruption, are the Norm these days, CEOs can say any thing, get Paid big bucks, while driving a Public company down, what a sham, if there is a God, or if there is a Law to watch over those criminals, this would not have happen and those CEO the disguised criminal would be behind Bars for Good

Jun 22 03:27 PM