NYT's Nortel Problems
Sometimes, you have to wonder if it’s ever really going to go Nortel’s (NT) way; whether the sun will shine rather than dark clouds looming overhead.
Case in point is problems being experienced by one of Nortel’s high-profile customers, The New York Times, with its communications network that has left reporters and employees without phones or e-mail. Nortel has apparently been responding with a high sense of urgency but the NYT’s issues must frustrate Nortel CEO Mike Zafirovski.
Nortel was given the NYT contract last year when it was selected to install a IP-based network for data, voice and video. The decision was part of the NYT’s move to a new facility in Times Square. In its old building, the NYT used a legacy voice/data network built on equipment from Avaya (NYSE:AV) and Cisco (NASDAQ:CSCO).
What's Left For Nortel?
First, Avaya got snapped up by private equity investors; now it’s 3Com. 3Com has been acquired by Bain Capital Partners for $2.2-billion - a move that will see it be taken private and have Huawei Technologies take a minority stake.
3Com (COMS) shareholders will receive $5.30 in cash for each share of 3Com stock, or a premium of about 44 percent over the stock’s $3.68 closing price on Thursday.
With Avaya and 3Com now snapped, the question is who’s left for Nortel to acquire - if it wants to make a major move. One option is Polycom, which seems to be a pretty good fit. Another route is smaller, strategic acquisitions to bolster it Wi-Max, IP-TV or enterprise data businesses.
More: eWeek has more details about the deal.
Nortel has completed the redemption of $1.8-billion in 4.2% convertible senior notes that were due September 2008. The notes were completed using the net proceeds from a $1.15-billion offering of convertible notes that was completed earlier this year.
In the wake of Peter Currie’s resignation earlier this year, Nortel has hired Pavi Binning as chief financial officer and executive vice-president. Binning, who starts next month, was previously CFO with Hanson Plc and Marconi Plc. He replaces David Drinkwater, who will return to his previous post as chief legal officer.