Nortel Picks up DiamondWare on a Buying Spree

Considering how often we've commented on Nortel Networks Corp.'s (NT) seemingly non-existent acquisition strategy, it's only fair to note that the telecom equipment giant is picking up the M&A pace, at least a little. On Thursday the company announced its second acquisition in two weeks, when it said it would buy DiamondWare, in a $7 million deal designed to improve the quality of its enterprise communications technology. Under the terms of the deal, Nortel may make additional payments of up to $3 million based on performance over the next 40 months.

The DiamondWare purchase comes on the heels of Nortel's deal last week to buy Pingtel Inc. a unit of the startup Bluesocket Inc., which should also boost the company's enterprise business. While DiamondWare's technology helps improve the sound quality in Web conferencing, Pingtel makes software to help unify and streamline disparate enterprise communications functions such as email, instant messaging and conferencing, for small and midsize businesses.

Like DiamondWare, the Pingtel purchase was also small (so small that Nortel didn't have to disclose the price), and neither acquisition comes anywhere close to delivering what would be needed to reverse Nortel's drift. But they do provide the faint outline of a strategy to pour more resources into the enterprise part of its business, an area that holds some of the best long-term potential as companies seek ways to upgrade their internal communications systems.