Nortel’s #1 in 40G and 100G

Huawei clearly has superior General Tao chicken

VoIP estimated value, I've never been clear on what Nortel means when they label something.. for example.. MEN Metro ETHERNET Networks.... don't remember NT selling much Enet into carriers. Verizon Bus for example bought about $5B in optical/sonet gear and MAYBE a million in Ethernet cards for OC-48classic and OM3500.

What's VoIP value based on?.... does it include all of the thousands of DMS 10/100/250/500 TDM switches out there... that will never be converted to VoIP?

Is NT dumping the TDM gear on a Zhone like company for sustaining support and just packaging the CS1500 and CS2k VoIP infrastructure pieces in the VoIP value?

The Ethernet was a big part of the story in creating the division until they dropped out of Ethernet couple of years later. if they had not, the optical guys would not have got their own division and probably reported into Lowe or Slattery (Hackney). They only created a slew of powerpoint jobs for their buddies.

The court issue was settled down for the Nortel MEN auction:

Bankrupt Nortel Wins Approval for Unit Auction Led by Ciena
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By Joe Schneider

Oct. 16 (Bloomberg) -- Bankrupt Nortel Networks Corp. won court approval for a plan to sell its optical-networking business at an auction with Ciena Corp. as lead bidder after making changes to the proposal.

Ciena, which has offered about $530 million for the unit, agreed to put up a 5 percent deposit as other bidders are required to do. The company also will let courts decide whether it can block the return of rival bidders’ deposits and accepted restrictions on payment of a breakup fee, said the company’s lawyer, Doug Bacon.

“This meets the requirements of the debtors’ best interests,” U.S. Bankruptcy Court Judge Kevin Gross said in Wilmington, Delaware. “I am pleased to grant the motion.”

Gross and a judge in Ontario yesterday rejected the proposed auction. Ciena, based in Linthicum, Maryland, wants the Nortel unit so it can acquire fiber-optic network products, broaden its customer base in Europe and Asia, and add customers such as Spain’s Telefonica SA.

Gross had objected to the breakup fee to be paid to Ciena if the purchase fell through, and said the unit’s buyer shouldn’t have a veto on bidders getting their deposits back.

Nortel is selling the unit as part of a broader effort to shed businesses since it entered bankruptcy protection nine months ago. The Toronto-based company has raised more than $2 billion from asset sales.

The case is Nortel Networks Inc., 09-10138, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporter on this story: Joe Schneider in Toronto at jschneider5@bloomberg.net.

Last Updated: October 16, 2009 00:01 EDT

I'd advise Ciena and anyone else who gets in bed with Nortel to wear a condom on their honeymoon night as Nortel's past lovers all seem to have been stricken down with some type of belligerent STD.
When it comes to syngerizing the ole lever, ladies, yall please remember Joel Hackney's approach to chivalry and dialogue.

Props to Ciena for anything they try to do to fix Zs diarrhea-gargle of a turnaround.

Article states "considers Nortel to be the leader in 40G and 100G technology" (probably very true), but article doesn't state they are number 1 in the market, sales or profits, big difference. Market is changing quickly, Nortel's MEN has slim margins and only breaks even on profit, hopefully the new owners will be able to change the organization, cost reduce the products and change it into a profitable organization (only possible if they dump upper, middle and lower management).

What are the chances of that happening?
If Ciena win the bidding war they are pretty well taking everybody.
Doesn't anybody else who may outbid them have to take the same amount.
That means management survives does it not.

UPDATE 1
replace fail with win

Nortel Wins Approval for Unit Auction Led by Ciena

see

http://www.bloomberg.com/apps/news?pid=20601082&sid=aqTR6_RiyFzg

Well Nortel did indeed try to pull on in ! Unfortunately NT, you are now under extreme scrutiny and I do aplaud to that. Thanks Mr gross !

''Ciena, which has offered about $530 million for the unit, agreed to put up a 5 percent deposit as other bidders are required to do. The company also will let courts decide whether it can block the return of rival bidders’ deposits and accepted restrictions on payment of a breakup fee, said the company’s lawyer, Doug Bacon.

“This meets the requirements of the debtors’ best interests,” U.S. Bankruptcy Court Judge Kevin Gross said in Wilmington, Delaware.''

Thanks Mr Gross !

Nortel Fails to Win Approval for Auction Led by Ciena (Update1)
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By Joe Schneider and Hugo Miller

Oct. 15 (Bloomberg) -- Nortel Networks Corp. failed to win court approval for a plan to sell its optical-networking business through an auction with Ciena Corp. as lead bidder.

Judges in Delaware and Ontario rejected the proposed auction today. Ciena, based in Linthicum, Maryland, offered to pay about $530 million for the business to add fiber-optic network products, broaden its customer base in Europe and Asia, and add Nortel customers like Spain’s Telefonica SA.

“We’re not prepared to approve these stalking-horse terms,” U.S. Bankruptcy Court Judge Kevin Gross said in court in Wilmington, Delaware. Gross said the breakup fee to be paid to Ciena if its purchase of the Nortel unit were to fall through was “not consistent” with Delaware law.

Nortel is selling the unit as part of a broader effort to shed businesses since it entered bankruptcy protection nine months ago. The Toronto-based company has raised more than $2 billion from asset sales.

“Without a successful closing, there is no benefit to the estate,” Gross said, saying that result wasn’t acceptable. The buyer shouldn’t have a veto on bidders getting their deposits back, he said.

Nicole Anderson, a spokeswoman for Ciena, declined to comment. Jay Barta, a Nortel spokesman, declined to comment.

What part of the terms were unacceptable.rency?

They initially insisted on all cash deals for their business units as they stall creditors and interest payments. Did Kevin Gross not like the shares portion of the offer?

Liquidating all like chapter 7 but really under chapter 11 laws, with few remaining board members who get paid even more, and even their last 2 CEOs putting in claims.

Also, was Nortel not aware that Delaware Law disabled the break up fee to be paid to CIEN...when perhaps they should have ...yet again...

When will the punch lines ever cease...

Humm !! That news doesn't smell to good. Is Nortel trying to sneak another one in here ?
Like : ok Ciena, let's make arrangements that you will save maximum of our upper management buddies job and we will grant you the stalking-horse bid with all kinds of ways to protect you from another bidder ! Hopefully, the creditors will(and should) have the last word on how this auction should be organized. NT, you did run the boat for long enough, please step aside and let the judge and the creditors handle what's left from this boat's crash and get the max out of it. Your time is out !

Infonetics has a good name albeit I take what they say about Nortel with a grain of salt over the last few years. Nortel has not faired well, even if they did have good tehnology in this arena which I don't doubt.

However, these low cost wonderful solutions Nortel is said to lead in, only saves the customer money by not having to upgrade their equipment.

Now that Nortel is dead, "Other companies making the list include ADVA, Alcatel-Lucent, Ciena, Cisco, Ericsson, Huawei, Infinera, Juniper, Mintera, NEC, Nokia Siemens, and StrataLight/Opnext" ...in this increasingly competitive and rapidly changing merging market of fewer players on the sell and buy sides vying for the same slice of pie.. targeting lower prices and higher volumes to survive and we see who is winning...

As far as competition and "issues with pricing", I got also got a jolt out of listing lower priced Huawei as having "little to no presence" in North America and EMEA which is outight false, given they are growing at the fastest rate and Huawei does indeed have offices in North America.

Huawei is making inroads into carriers in North America.

Wahway makes garbage.
A clone maker grossly subsidized by a communist regime.
They give away their garbage for free.
The only thing I like about wahway is that their government take care of their own.
Real, admirable qualities the government of canuckistan and ontario could stand to learn from.

Don't tell zeroman that, he double posts for them to further discredit Nortel.
Mao would be proud.

Huawei is making inroads into carriers in North America.

I'm glad that you recognise it might be good gear Proto. A week ago you coudln't believe anyone would buy it over Huawei's offerings.

http://www.allaboutnortel.com/2009/10/06/cienas-press-release-of-nortel-purchase/#comments

Unfortunately for Nortel they can sell it for more than Huawei gear and still make less Net due to lower margins.

If you had similar technologies with one costing substantially less, which would you buy? Especially if the company wasn't bust and being sold off.

from a cost perspective Huawei wins and grows in leaps and bounds by selling for less

in all fairness one might argue they get what they pay for but this has not worked for Nortel, let alone selling for more and making even less as you suggest... others are not sitting still in this space either as Nortel disppears or gets sold off to sell anything...

I wonder who will have the latest and greatest mouse trap next year to save their customers money =)

You have to change the title of the article to: "Nortel’s #1 in 40G and 100G with no profits".

They are talking about technology, moron. The drug dealers have often more profits.

Typical engineering bonehead – lets design a gold plated laser, maybe someone can sell it, and if not then we will give it below cost.
Only the UMTS could rival the optical as the biggest money sink hole. Never made a penny in profits.

So what section of Nortel does this technology belong? One that is being sold or still on the block.

Métro ethernet networks, optical division ....... the crown jewels of NT. Bids are starting at 1 billion please !!

Nortel couldn't make a living out of the technology, but I have no doubt a well run firm with it could do incredibly well.

Nortel attempted to do too many things at the same time without the right focus or business and financial structure. They failed with that approach rather than making the tough decisions a few years ago that were really needed.

This optical business is important now and will continue to be important for 3 to 5 years to come, especially with the growth in Wireless Data use coming from 3G & 4G wireless networks. Eventually all that data needs to hit a backbone and as it grows exponentially, more backbone capacity will be required. That is one of the biggest opportunities for a potential acquisition.

There is one challenge here... Nortel MEN does have a technology leadership in 40Gig and 100Gig for long haul networks...their cost structure is no where it needs to be to present a profitable metropolitan optical solution (where the volume are).

That statement makes zero cents.

They have a great technology for long distance hi capacity links... You can build a business on this... but it will be much smaller than the existing MEN one. Bulk of their revenues are legacy optical equipment in the metro network...legacy install based that is not going to be replaced with a 40G/100G long distance technology. Please explain why my statement makes no sense...

Don't worry.
You'll be put on the straight and narrow soon.

I agree, Nortel had a big cost structure problem that originated from the John Roth years. Management was way to slow to fix it, mostly because the status quo was the best way to preserve self interests.