Is Avaya the Logical Buyer for Enterprise?

Now that Nortel’s CDMA and LTE businesses have been sold, Nortel’s top-notch restructuring team can focused its energy on dumping the company’s remaining assets – with the enterprise and Metro Ethernet Network units being at the top of the list.

Rumours abound that Avaya is poised to make a $500-million bid for the enterprise business. In theory, it’s a move that makes sense given it would strengthen Avaya’s competitive positive in the enterprise market, provide it with a larger customer base, and enhance its VoIP/IP portfolio.

Zeus Kerravala, an analyst with the Yankee Group, told Computerworld that an Avaya-Nortel deal is about Nortel’s customers, and getting to make the switch to Avaay gear.

“They’d want to upgrade the legacy and hybrid customers to IP,” he says. “That would be the question. Could they convert the customers fast enough before they go to another vendor?”

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  • NortelTragedy

    Good thing Hackney isn't in CDMA negotiations with NSN and NA President Sue Spradley.

    I'd like to Hackney try to order Sue Spradley around the Nokia parking lot. Sue would kick Hackney's sorry @ss across the Nokia campus.

  • NortelTragedy

    Hackney = Nortel pimp

  • protosphere

    yes they were down 40% but they were down 30% before that weren't they? This was right after Z-Man put his pal Hack in place of a proven veteran that has since left for Cisco

    Nortel is burning and tanking greater than market contrary to your indication I can not say so with a straight face, even in this economy

    More importantly they are now insolvent for all the difference it makes

    Furthermore, they have no restructuring plan but are selling everything they can as fast as they can, a restructuring plan TiC repeated like it was a given or something while speculating on no bankruptcy to begin with. TongeinCheeks also calls critics bashers while he pumped this contradicting dog over the years to this day. I remain amused with some of the posts here and want no part of misleading with intent .

    I apologize to readers for the mix up with Avaya and Siemens, as you too seem selectively keen on the Nortel PR while this turd floats. Nonetheless, I appreciate the correction to keep facts and truth straight, at least we “bashers” reply when corrected.

    Critics are honest, not usually rude, or mislead with intent to personally attack others judging by one owns unethical actions. I even see strong buy still posted on Yahoo message board to get an idea of the relentless challenge.

    Anyways, I was referencing the following article from memory and again apologize for the incorrect reference to Avaya only as a means to straighten out the facts, and not out of any respect as you may understand:

    http://www.wirelessindustrynews.org/news-apr-20…

    Last month, Nokia Siemens made an unsolicited offer for vital segments of Nortel’s wireless carrier division, including its profitable CDMA segment and divisions handling TDM and VoIP, according to The Wall Street Journal.

    If the transaction goes through, it will likely involve the transfer of a little over 200 employees from Nortel. A Nokia Siemens Network spokeswoman declined to comment on the matter.

    Acquiring Nortel's LTE R&D division would allow Nokia Siemens access to U.S. wireless carrier giant Verizon, although the carrier already went with Alcatel-Lucent and Ericsson.

  • zeroman

    right on part 1.

  • zeroman

    would be nice to see her slap Hackney and choke him in the parking lot. Hack will then whine claiming assault.

  • zeroman

    good. but ouch for nortel sales and all those fat bellied business development, marketing etc.

  • zeroman

    mostly from panicked customers to keep their nortel stuff until their risks are mitigated. after that they dont need you.

  • zeroman

    they need to keep some people for sure. however once they buy the business it becomes global news instantly. a customer with nortel would switch with a swap out of equipment over time. most likely avaya is already touching some of these accounts.

  • zeroman

    going to drag this process on. 650 million will turn into 450 million by august.

    nortel is taking faster than a comet plummeting to earth. sales are down a whopping 40% getting worse everyday. any news or comment

  • PM_Guy

    Docket 962, 963,964 – Objections from the creditors to the CMDA-LTE sale is complicating the stalking horse sale and will likely delay the stocking house sale.

    http://chapter11.epiqsystems.com/docket/docketl…

    This is complicating the stalking horse sale of Enterprise as Nortel wanted to use this deal as a template for the sale of the other divisions.

    The 3 candidates at this time for Enterprise staking house are:
    Avaya, Gores Siemens and Shared Technologies ( A distributor of Nortel – seems strange since they signed a distribution deal with Avaya Jan 20/09 after Nortel Filed for Bankruptcy protection).

    There is also a private equity firm interested that may bid post stalking horse.There are also as a number other companies interested in pieces of Enterprise.

  • broadbandbill

    If she could kick his boss' ass as well as she did can you imagine what she could do to Junior? Celebrity Death Match I would gladly pay for…–bb

  • Theleftbehind

    someone should whack Hackney too

  • falcon90

    I guess what people are missing is the fact that Nortel has Nortel Government Solutions which is very profitable to Nortel and maybe the silver lining in a Nortel Enterprise sell. Nortel Government Solutions currently has the the Social Security Administration contract for 10 years worth 100 million and they also work closely with General Dynamics in various GSA contracts. Whoever buys Nortel Enterprise would indeed put themselves heavy into the federal arena.

  • MikeZ_ElPresidente

    What about CVAS? all talk is about MEN and Enterprise, yet nothing about CVAS

  • borissss

    There are 4 potential buyers including IBM and HP.

  • borissss

    Lots of giants went bankrupt including IBM and Alcatel,however they still exist.Nortel name shouldn't disappear too.

  • felixmk

    Does anyone still buy that stuff?

  • TongueInCheek

    Atta boy, you pull out old information that has been proven wrong and attempt to use it as part of your current bashing. And you say that you don't mislead. What a friggin joke.

    True or False – The NSN deal to Nortel CDMA & LTE Access includes a transfer of 2,500 people which is 12.5 times greater than the number you try to push in people's faces.

  • StillAtIt

    Can you confirm where you've heard that Shared Technologies is a candidate? We had heard such rumors (quiet rumors) but have yet to have seen anything leaked to the news.

  • TongueInCheek

    Wouldn't an acquisition by Shared Technologies create a fundamental shift in their business plan? Shared also resells Avaya, NEC and Mitel (along with Nortel) so an acquisition of this type could impact those relationships. Granted, it can be assumed that owning Nortel Enterprise would provide better gross margins than a reseller agreement.

  • another_optimist

    I actualy do agree with you completely, well on some level at least. I find that the people who build this company up falsely are just as vile as the upper level management who mislead the public ad drove the company down into the ground.

    My point of view in the matter is that at the core, the products and solutions that Nortel offers often gets mixed up with the management of Nortel in these posts of late and it's sad. We all agree that Nortel is a mess with the way it's being ran, and on some level, the fact that it's selling everything off is probably the best thing that can happen. Get rid of the antiquated ways of operation and move on. It's time to thin the structure and get rid of people and their their mini-kingdoms of crappy processes.

    Moving to the technology and the solutions, how many vendors can you say the following about? Our voice switch has been running for over 15 years without being touched and never having to be patched. That you can take that same switch and with minimal effort upgrade it to support the latest of applications and capabilities (without a forklift). Or how many data switch vendors do you know that have made switches that can run for 13+ years without major problems. My favorite is this one: Do you know of any Cisco core Routers that the end user has to worry about what happens when the uptime counter reaches the end and loops back to '0'?

    All of those things are true of Nortel technology.

    And yes I do agree that things are tanking more and more and the longer they wait to move, the worse it will get. The press release that Nortel is seeking external parties to divest the business' has put every Nortel customer in their right mind into a minimum of a holding pattern until a clear buyer has been named, with a vision of where the technology will go.

    This was not all directed directly to you, just an over all statement.

  • zeroman

    anything above a cockroach could qualify. need to be more specific. ;-)

  • GoProto

    Wouldn't an objection from the creditors on the Nokia deal also disrupt any possible current deals on the table for Enterprise, etc..? You would think this situation would freeze any potential buyer of other slices of the Nortel pie stick that slice on ice for now and wait to see how this objection plays out..

  • freqmgr

    More delay….more bonus payments for the ELT…..

  • zeroman

    what is cvas? is it not part of nsn deal

  • razzy1

    IBM and HP? Seriously? That would be very suprising.

    Here's who lightreading has pegged as suspects:

    http://www.lightreading.com/document.asp?doc_id…

  • horace_grimswold

    Nearing completion:

    http://ctv2.theglobeandmail.com/servlet/story/R…

    “Nortel Networks Corp. was close to a deal last night to sell one of its key businesses to rival Avaya Inc.

    The sale of the enterprise unit to Avaya would mean that over the course of a single week the 127-year-old Canadian tech icon had agreed to sell off assets responsible for nearly half its revenue, following a deal with Nokia Siemens Networks for its wireless assets announced June 19.

    Nortel and Avaya cleared one of the last major hurdles on Thursday and the two were near to signing the paperwork on a deal, worth as much as $500-million (U.S.), a source familiar with the situation said.

    The two companies had alerted some of their major customers and resellers during the week that a possible deal was in the works. “

  • anotheropsguy1

    If this is true this wil surely lead to the the flooding of the markets of the Enterprise workforce.

    Well, inkeeping with the activities of E&Y, the hierarchy and of course the BoD.

    Great way to start a week, eh!

  • StillAtIt

    Great visual image and terrific comic relief. Thanks for that!

  • TongueInCheek

    It's been suggested across multiple sources that there are 3 possible contenders for the Nortel Enterprise Stalking Horse Agreement and auction. We've seen reports of Silver Lake Partners (Avaya), The Gores Group (Siemens Enterprise Communications) and a 3rd Private Equity company that hasn't been named.

    After digging around looking for other Private Equity plays with a technology portfolio, I wonder if it may be Wesley Clover, which has Terry Mathews as their Chairman. Nortel Enterprise could easily be set up in this organization to deal with larger enterprise accounts while the Mitel entity looks after the SMB segment.

    Who knows, but after doing some research on Wesley Clover it looks like they may be that anonymous 3rd Private Equity play.

  • borissss

    Yes it is really surprising.I have never thought of IBM and HP I should admit however when I dig deeper it may be really reasonable for them since CVAS platforms consist of lots of servers and a database software.A good market to sell servers,DB2 and AIX software.

  • borissss

    carrier voice application solutions

  • fedfan1

    The thrid main contender is Shared Technologies.

  • TongueInCheek

    My struggle with Shared Technologies is how they would operate the business while limiting major conflict with their other partners including; Avaya, NEC and Mitel. It doesn't make a lot of sense to me unless their plan is to operate Nortel Enterprise as a separate business. It wasn't that long ago that they became an Avaya Partner we well.

  • mc_seem

    >>> Netas does 75% of VoIP R&D of Nortel.

    Nonsense.

  • netas

    thanks for the very explanatory answer :) :)

  • NTblinker

    In stock market news regarding Netas, it was said that the CDMA deal would affect $1.7 M per year of Netas's software export business.

  • netas

    Thanks,

    but, its very minimal compared to annual sales of around US$150 mn. as i said VoIP is the key here.

    Netas Mcap is around US$100 mn whereas the company has no debt but US$70 mn cash and US$80 mn worth of land. in addition, 1Q2009 net income US$5 mn.

    these were my main investment point.

    all the best,

    many thanks

  • Guy13

    I am wondering what will happen to the employees if Nortel Enterprise will be sold to one of those companies. I am working at one of the affected sites and people are very concerned. Many are already looking for jobs and are scared of what may happen. Is too bad to fire people, they are working hard here and are doing great job. Without the employees working here, I believe that Enterprise would not be even close to what it was. We are afraid that those who will buy Enterprise will layoff many of us. Do you believe that we should worry? Who will be a better choice for the employees? What will happen to us if Enterprise will not be sold to anyone?

  • borissss

    It depends on what site you are on and who will buy Enterprise.For NA employees Avaya will be the best-acquirer.But if Siemens enterprise buys Enterprise,they would prefer cheaper countries esp Turkey.

  • How_long

    If its not sold in one piece it will be sold in bits. It really needs to happen soon. The longer it is left hanging the less confidence there is.
    I agree it is very bad for employees whatever happens. Sad days.

  • PM_Guy

    As I mention a deal was expect Friday but did not close. It will likely occur within the next couple weeks now.

    http://www.theglobeandmail.com/report-on-busine…

  • tiredofitall

    Whether Avaya is the best case for NA employees is open to debate. I am an NA enterprise voice employee and we have been living in fear of an Avaya purchase for some time now. Of all the bidders it is my understanding that Avaya has the greatest amount of overlap, and they are clearly interesting more in our install base than our products. Siemens, on the other hand, is looking to expand their North American operations.

    IMHO, the best case is a private equity firm that thinks it can make a go of the business provided a smart management team is in place. But hey, I'm looking out for my own best interests at this point…

  • bechapes

    Avaya is probably the worst buyer for Nortel amongst the bidders but namely for every Nortel customers and employees out there. Avaya's closed architecture means that Nortel customers would have to be forklifted if they didn't leave on their own accord. And Avaya with a large North American footprint doesn't need the employees either. Siemens/Gores on the other hand has a much smaller NA footprint than Avaya and sees it as a strategic area. Not only are their offerings much more open than Avaya, but they need more people in NA which is good for both customers and employees. And the Enterasys and Nortel products while similiar in terms of hardware typically have had their sweet spots in different verticals.

    For the same reason that Nortel walked away from buying Avaya almost two years ago.
    “messy, fraught with integration issues” RBC Capital Markets analyst Mark Sue
    “the combination also would have posed significant challenges” UBS Investment Research analyst Nikos Theodosopoulos
    “UBS imagined $250 million in synergies from a Nortel/Avaya merger over several years, with $50 million to $100 million coming in the first year. Synergies would come mainly from product-related sales, general and administrative expenses but would have been harder to find in product development and supply chain areas” UBS said.
    “And while Avaya sells most of its gear directly to its customers, Nortel relies much more on resellers, making it harder for the combined company to unify and rationalize its sales channels. Avaya wouldn’t do much for Nortel’s revenue growth, either, UBS said, anticipating nearly 3% growth from Nortel next year and a little more than 4% growth from Avaya.”

  • bechapes

    Avaya is probably the worst buyer for Nortel amongst the bidders but namely for every Nortel customers and employees out there. Avaya's closed architecture means that Nortel customers would have to be forklifted if they didn't leave on their own accord. And Avaya with a large North American footprint doesn't need the employees either. Siemens/Gores on the other hand has a much smaller NA footprint than Avaya and sees it as a strategic area. Not only are their offerings much more open than Avaya, but they need more people in NA which is good for both customers and employees. And the Enterasys and Nortel products while similiar in terms of hardware typically have had their sweet spots in different verticals.

    For the same reason that Nortel walked away from buying Avaya almost two years ago.
    “messy, fraught with integration issues” RBC Capital Markets analyst Mark Sue
    “the combination also would have posed significant challenges” UBS Investment Research analyst Nikos Theodosopoulos
    “UBS imagined $250 million in synergies from a Nortel/Avaya merger over several years, with $50 million to $100 million coming in the first year. Synergies would come mainly from product-related sales, general and administrative expenses but would have been harder to find in product development and supply chain areas” UBS said.
    “And while Avaya sells most of its gear directly to its customers, Nortel relies much more on resellers, making it harder for the combined company to unify and rationalize its sales channels. Avaya wouldn’t do much for Nortel’s revenue growth, either, UBS said, anticipating nearly 3% growth from Nortel next year and a little more than 4% growth from Avaya.”

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