Is the CDMA Sale the Beginning of the End?

By Mark Evans | Published: June 19, 2009

Five months after filing for bankruptcy protection, Nortel 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.

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 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.

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  • felixmk

    Yes, Nortel is done. Something called “Nortel” will remain at the end but it will likely be some old businesses that nobody wants, and that still generate positive cash flow, e.g. the old DMS switching business, GSM, Passport, some old bits of enterprise.. The good bits like enterprise voice, optical, VOIP will all be sold at bargain prices and the cash disbursed to lawyers and accountants, with pittances for pensioners, severed employees, and bond holders.

  • vvvv

    I assume there'll be an announcement soon about divestiture of the GSM-R business… perhaps vanilla GSM too.

  • hangingin

    Nortel's CDMA business was delivering $700M to $800M in earnings prior to BK. What a disgrace. Lowe was just trying to dump the business to get the 25% portion of his undeserved bonus.

  • NortelEmp

    Interesting that on Thursday Mike told MPs that he wouldn't have any news on the sale of businesses until the end of the summer. Then, less than 48 hours later, this happens.

    Confirms that he either lies or is completely ignorant of what is going on.

  • NortelEmp

    This is interesting:

    “Export Development Canada, Canada's government-owned export credit agency, is supporting the deal with a $300 million loan commitment, NSN said.”

    http://news.yahoo.com/s/nm/20090620/bs_nm/us_no…

  • OneOfTheFewLeft

    That ridiculous ass “ZMail” that went out this afternoon was nothing more than the words of a completely broken little boy that has been playing too long in a man's world. I am so sick and tired of listening to his pathetic crap as he tries to convene everyone that he is the victim.

    Mike.. PLEASE.. I know you read this board. No one will think any less of you if you resign. Actually… I don't think that there is any way we could think any less of you. So please…relinquish your position already and go ruin another company and let us at least die off with a thread of our dignity left.

  • broadbandbill

    Three years after I told him to sell his wireless business he finally listened! Better late than never.

    If his ego wasn’t bigger than his ability to support it the sale of the wireless unit 3 years ago would have fetched close to $2B and very likely saved the rest of this once-a-great-company. And he gets paid for this? Perhaps now he can afford his kids’ college education (btw two have already graduated)…–bb

  • broadbandbill

    Reading his email is akin to listening to the ruling mulas in Iran; every word they utter is yet another reminder they are so out of touch with reality….–bb

  • broadbandbill

    Perhaps even both…–bb

  • protosphere

    Great point. He never mentioned this Friday, how transparent.
    I wonder if NoTell is fire-selling out of tantrum or pressure following law-makers raised brows

    …and suddenly delisted from TSX, so much news all at once.

  • protosphere

    “The deal will also need approval from the Canadian government.”

    What exactly does this mean?

  • Another_Nortel_Watcher

    This is a good move. The wireless business for Nortel was dead because CDMA was stranded. The longer they waited to close a deal, the less they would get for it.

    So, does this mean Nortel can shed Richard Lowe? Fingers crossed.

  • The psychiatrist

    Man can you believe it-Mike F__ked me on my last 1000 shares,they will be delisting them as of Monday.

    Mike Z you are shameless CEO who has cost shareholders billions all because of your inability to recognize that you are not CEO material.

    Even though you will move on after the Nortel name is dead,the one thing that will follow you throughout the rest of your life will be your guilty conscience for knowing that deep inside you could have prevented all this agony for employees ,customers,and shareholders had you not let your ego prevent you from making obvious choices at opportune times.

    There was an article written recently that stated some equity management group had made an offer of $4 billion for the whole company which would have at least given shareholders $8 a share,and now because of your stupidity we will be left with nothing.

    No matter how cold and stone faced you may be,you can still admit to yourself that you screwed up BIG TIME!!!!

    Walking away with millions while shareholders are robbed of their last pennies is something extremely shameful that you will not be able to shake off.

    Way to Mikey!

  • Resigned_From_NT

    Folks, as part of my role that I have recently resigned from, I have been closely tied to the bankruptcy process.

    That said, and in conjuction with what was conveniently announced late this Friday evening, it's over for Nortel. Game, set, match.

    The sad reality of this situation stems from who you consider to be the winners and losers of this situation. Obviously, the well-connected executives who retain massive bonus payments and who will land cushy jobs are the winners. As far as the rank and file are concerned, it is the young punks, like myself, who happened to be professionally designated, and who can talk a big game in interviews, who come out with good jobs on the outside. On that note, my heart goes out to those who have committed a number of years, and decades, to this company, only to find out that the rewards they were promised have been severely slashed. I truly am disgusted with what I have seen over the past six months. Best of luck to everyone.

  • InTheRoundEye

    I'm strangely relieved it's all over with, no more wondering and waiting. Time to put it all behind you, and move on to the next chapter in your life.

    Good bye Nortel…

    eom

  • InTheRoundEye

    According to internal FAQs Nortel will be completely dissolved, the only way the name will remain will be through acquisition and the acquiring party chooses to do so.

  • OneOfTheFewLeft

    “the one thing that will follow you throughout the rest of your life will be your guilty conscience “

    Thinking that Mike has a conscience is a bit of a stretch isn't it? I'm sure that once this is completely over with and behind him the only thing that will be following him will be his three lackeys Hackney, Lowe, and Flanagan… and they will be whispering in his ear “it's OK sir, that company wasn't worthy of you anyway. We can make a fresh start somewhere else. And you WILL be the next Jack Welch. We Believe In You!”

  • sha_from_israel

    please help to understand !!!!!

    i have 15000 shares in nasdaq (NTRLQ) , what is going to happend

    does it going to delested or going up i hope

    thanks

  • xxx_nortel

    1000 shares…what's that, $180 bucks….who the hell cares ?

    Shareholders would never have gotten close to the $8/share figure you mention as Nortel has to pay off billions and billions to creditors first leaving nothing for shareholders. Face it, the shares have had 0 value for months. Delisting just acknowledges that fact and gets the speculators out of the picture.

    Do what I did…get a stock certificate from your broker then sell it on eBay someday; may be worth more as a collector's item.

  • NTblinker

    may be last chance for a bailout! as the sale needs canadian government approval at last.

  • here_to_the_end

    Well done, positive news for the 2,500.

    Looks like the first lifeboat is pulling alongside, and there may be a few more on the horizon.

    Some good folks have worked hard on this deal, great credit to them.

    For those of us in the band (Titanic reference) ….. it will be bitter-sweet sorrow as some friends get safe.

  • bankrupt_bob

    “I repeat, we are NOT really going to declare bankruptcy, we are just examing all our alternatives.” –Mike Z.

  • bankrupt_bob

    And, oh yeah, I hope all those lying, cheating, scumbags rot in hades.

  • felixmk

    Exactly. Lowe was in it for his last pound of flesh and now he will get it.

  • tryn2makealivin

    If by Monday-Tuesday you are not for sure about the future of your position with whomever and you were saving vacation in order to be paid for it I would put in for a long vacation with pay. Once the switch is flipped to “7″ you will lose severance, vacation pay, investment and possibly pension.

    I am almost out of teeth I have been kicked so many times.

  • less

    I, too, feel relief, even though Nortel lies far behind me; almost two years and over 700 miles.

  • less

    I Believe h'es got it covered.

    to jack:
    to spend time in useless activity, to trifle or meddle (with), to harass, treat with contempt, etc.

    to welch:
    cheat by avoiding payment of a gambling debt, cheat, rip off, chisel – deprive somebody of something by deceit

  • yes4aapl

    may be last chance for a bailout! as the sale needs canadian government approval at last.
    re
    What more a proof you need?
    Canadian gov approved $300 mill for the transition to happen.
    y4

  • nblog

    Interesting http://www.avaya.com/ is totally down

  • RealityStrikes

    No, you should get your vacation paid by Nortel if you are laid off, or are transfered over to NSN as full-time or contractor.

  • vvvv

    Don't count on it. Rumors are flying that divested employees in the US will be screwed out of accrued vacation — they will begin work at the new company with a zero vacation balance, but Nortel will refuse to pay out the accrued balance and advise ex-employees to file as unsecured creditors.

    Many employees have been accruing maximum vacation as a substitute for severance, but this could backfire.

  • yes4aapl
  • http://nortelinsider.wordpress.com/ Desk Jockey

    If we are going to post Mike Z quotes that have turned out to be false, we will need a whole other blog dedicated to it.

    He is a crook and he knows it, only crooks sweat and twitch as much as he did when questioned by the government folks.

  • http://nortelinsider.wordpress.com/ Desk Jockey

    Yep, you're right. Announcing big news like this late on a Friday is a classic move to avoid flak and delay the consequences.

  • Norterrible

    Are you really that dumb? Your shares are being delisted and are completely worthless.

  • RealityStrikes

    That's why I wrote “should”. :)

  • Norterrible

    You assume wrong. The remaining wireless will likely just be liquidated.

  • ChaiTea

    Richard Lowe was a senior executive leader for the last several years and had direct hand in all decision making at the executive level. Its obvious that the whole bunch of senior executives have failed the Nortel employees, shareholders, channel partners and customers. Why should he be allowed to lead this portfolio again? It would be stupidity.

  • painful_truth

    Nortel is the best ran company in Canada…..let's keep it that way ……

  • painful_truth

    Nortel is the best ran company in Canada…..let's keep it that way ……

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