Nortel Networks Corp., which has sold off its major business assets, announced Friday it is negotiating to sell the unit that makes high-end switches, including the Shasta product line.
Toronto-based Nortel has been operating under bankruptcy protection since January, 2009, after losing money nearly every year since 1998.
The firm said it has entered a “stalking horse” agreement to sell its multi-service switches for US$39 million to PSP Holding LLC. Nortel described the prospective buyer as “a special purpose entity to be fully funded at closing by Marlin Equity Partners and Samnite Technologies Inc., a communications technology company based in Ottawa.”
Nortel sold several other assets using similar arrangements. For example, in June, 2009, Nokia Siemens Networks made a stalking horse bid for Nortel’s code division multiple access (CDMA) unit, plus a non-exclusive licence to use Nortel’s Long Term Evolution patents. NSN was outbid by Stockholm-based LM Ericsson. At the time, several Liberal politicians and newspapers erroneously reported that Ericsson would actually acquire the Nortel LTE patents, close the former Nortel plants and fire the Canadian workers. In reality, Ericsson’s goal was to sell CDMA equipment and services to North American carriers. Ericsson hired about 900 Canadian Nortel workers and kept its Ottawa-based research facility.
Nortel still owns its LTE and other patents and has yet to decide whether the company will remain operating as a patent licensing firm.
Avaya is using Nortel’s Agile Communications Environment and Contact Center products for its voice and data integration products, aimed mainly at companies involving call centres.
In 2000, Nortel lost nearly US$3.5 billion (after losing money the previous two years) but the investor community barely noticed because revenue was US$28 billion. But revenues dropped to US$10.4 million in 2008, the year before Nortel filed for bankruptcy protection.
In 2001, Nortel employed 94,000 worldwide. Last February, it employed 534. Founded in 1895 as Bell Canada Enterprises Inc.’s manufacturing unit, it was known as Northern Electric, then Northern Telecom and finally Nortel Networks.