Nortel’s M&A Scorecard

By Mark Evans | Published: November 24, 2009

Update: The auction of the GSM/GSM-R business is being held today.

It has been nearly a year since Nortel filed for bankruptcy protection, and five months since the company announced it was going to sell all of its assets instead of attempting to emerge as the New Nortel. Here’s a scorecard of what’s been sold, and what’s still on the block:

- In February, Nortel sold its data-switch business (part of of its Layer 4 to Layer 7 portfolio) to Israel’s Radware for $17.7-million. The assets were part of Nortel’s $7.8-billion purchase of Alteon WebSystems in 2000.

- The CDMA wirleess business and LTE R&D unit was sold to Ericsson for $1.13-billion. Ericsson has hired 800 ex-Nortel employees. Nokia Siemens Networks made an original stalking horse bid of $650-million.

- The metro Ethernet network business, considered to be Nortel’s “crown jewel” a year ago when it was put on the block, was acquired by Ciena Corp. for $769-million after outbidding Nokia Siemens. Ciena, which originally bid $511-million, plans to hire 2,000 MEN employees.

- Avaya bought Nortel’s enterprise business for $900-million, nearly double the $475-million “stalking horse” offer it originally made.

- Hitachi purchased certain software assets and technology related to next generation packet core network components for $10-million.

Total Proceeds: $2.82-billion

What’s Still on the Block

- Nortel’s GSM/GSM-R business, which will likely go on the auction block later this year.

- The carrier business, including an industry-leading VOIP unit

- A portfolio of more than 3,000 patents, including the much-coveted long-term evolution patents that will attract plenty of interest, including Research in Motion.

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  • davebaz
    Hey, so does anyone know whats gonna happen with Nortel? Are they selling everything and shutting down?
  • zeroman
    103 million peanuts and pretzels.

    Nortel selects Ericsson and Kapsch ... they were the only bidders you Nortel morons.
  • whopperscan
    Points from Nortel press release at http://www2.nortel.com/go/news_detail.jsp?cat_i...
    * Ericsson and Kapsch emerge as successful joint bidders for US$103 million in cash
    * Sale to include substantially all of the assets of th global GSM/GSM-R business with approximately 680 Nortel employees
    * U.S. and Canadian court approvals of sale will be sought at a joint hearing on December 2, 2009
    Ericsson will purchase the North American GSM business and Kapsch will purchase the European and Taiwan GSM businesses. Kapsch will also purchase the global GSM-R business.

    2 comments;
    1) No mention of Asia or CALA is puzzling. Asia had most of the major GSM builds of recent years for Nortel. But as we all know, some (not all) were at catastrophic losses (take a bow BoD, Dunn & Owens for signing them off). Much of GSM R&D was moved to China. And the 51% Nortel joint venture GDNT, was taking on most GSM & CDMA manufacturing prior to the bust....
    2) The shockingly (to me anyway) low value of $103M for the lot, they're doing no more than buying customer base & footprints, and will just run out service contracts.
    Sad sad sad... I even half-hoped NSN might jump in to buy Nth Am customer base footprint... can't blame them for not bothering though.
  • zeroman
    in case you missed it China Unicom one of the largest customers will not buy anymore GSM from Nortel and replace it over time. expect the same with Bharti or other players as the market is crowded with products.

    103 million is just under 7% of total sales. what a deal. one would have thought the company would just operate these for cash for the next few years to return the maximum in dividends to shareholders, pensioners and creditors. Thats what I'd do but then am not qualified as a greedy exec looking for their next ticket to luxuries or one who throws in the towel.

    something is not right the way such a firesale takes place but when was it ever.
  • nomorent
    I bid $25.99 for the GSM-R. Do you thing I'll get it?
  • whopperscan
    Hey you were very dammed close!! what would you have done with it, called a train?
  • zeroman
    could have sucked the revenue over a few years and then bought rights to a railroad corridor.
  • yes4aapl
    more than $300 bill market cap company sold for $3 bill. Choosing green CEO, who never before was CEO was a big mistake. Mistakes and frauds.
    example
    Nortel was not profitable so it was easy to predict when Nortel runs out of cash.
    How much cash Nortel needed to survive the recession? Why Nortel did not prepare itself for upcoming years of no profits? To lose company that big shows bad intentions or stupidity. Which was which?
    OK, lets say there was no more credits available for Nortel so why Nortel did not address that problem by selling assets when it was necessary, 3 years ago?
    Proto calls that inaction as Bambi in the head lights.
    Those things I mentioned were predictable.
    Employees, pensioners, LTD, creditors.... all should sue Nortel for inaction and destroying the company.
    I hope to see F Dunn testifying and questioned by prosecutors. Canada has to expose the reason for Nortel's collapse just to learn a lesson
    Did I mention 10 mill small investors defrauded?
    10 mill plus minus 10%
  • happy2b
    Bottom line Nortel executives did have to balls to sell off or get out of line of businesses, change direction, stay ahead of the market, back in 2001 is when they should have been making the tough decisions, instead they decided to hire white collar executive criminals for the next 8 years.
  • wasthere
    The GSM business is a $1.5 billion-a-year asset, and like the CDMA business—with $2 billion in 2008 revenues—it is still a profitable venture for Nortel. It includes an established customer base of global operators including Vodafone (NYSE:VOD), Orange (NYSE:FTE), T-Mobile (NYSE:DT) and China Unicom (NYSE:CHU) and maintains an installed base of 116,000 GSM cell sites and an even larger footprint of packet core and voice switching gear.

    Ok now, who starts the bidding ? Did I heard $10 ? Ten dollar once, ten dollar twice .........
  • Teleguy
    Who won? It better not last 3 days. This baby should be wrapped up over coffee and donuts.
  • fishymcdonk
    I do not like this General Tao chicken
  • bankrupt_bob
    Regarding the auction... it must be one of those "silent" ones.
  • less
    ha - when you hear crickets chirp you know the industry is standing anxiously by like little schoolgirls for Nortel to drop da bomb.
  • protosphere
    with $28 Billion in growing claims, $11 Billion debt... even cash in decline now while stalling huge overhead and growing liabilities...

    what will left with these few billion in depreciating asset sales...way below zero

    bonuses, lies and slander while selling below cost and endless hype was the Nortel way ...all the way to the fraud trials on both sides of the border

    this bonus happy Canadian Enron disappears from the landscape altogether now after accounting for 1/3rd pf the traffic on the TSX and a whopping $366B market cap... dead and gone to distance itself from its past

    a few billion in declining fire sold assets are nothing relative to by far below zero

    heck. they use to dilute 100M shares a year to keep good people. Big bucks at a by far higher share value over the years... huge..where is that money now?

    only the fraud trials will remain in the news after all is said and done. The real reason they died

    As they still pay bonuses into the close while fire selling assets, Even Binning and CEO is being sue for misleading as Manley's law firm defends Dunn... a Canadian home grown scam like Bre-X. Never mind the theatrics. This is the bottom line here. Fraud with endless delays and unreliable revisions to bad, bad numbers to final demise and fire selling assets for peanuts with nothing left.
  • freqmgr
    But those that "lead" Nortel will get bonuses right up to the last day...for doing their job taking things apart and dumping employees with no sevarance/TRA....ah yes....making those performance based bonuses!
  • scoop1985
    There is not $28B in real creditor claims. There is double and triple counting going on for many claims. I know for myself that my claim is being shown three times, effectively tripling the amount of my claim - one for my original claim; one for what Nortel believes is due to me; and a final one for my final submission (slight modification of the original submission). Just adding the amount of the claims does not yield a particularly relevant piece of information and is most likely why the bonds are still trading/valued greater than $5B/$28B on the dollar.
  • SG2000
    Don't forget that Nortel's share in the LG-Nortel JV is also for sale.
  • happy2b
    Nortel's crown jewel sold for the least amount of money of any of its divisions,
    plus it had to be a cash and options deal, all the other divisions were sold for
    cash only at double the crown jewel price. Once again shows how bad Nortel management was, they never knew what was a jewel and what was fluff.
  • random123
    Does anyone have a link to further information about the Auction process? I find it fascinating and wonder how it's done on the day(s).

    I imagine that the auction is held in a relatively secure location and each team is given their own room with IP and voice comms back to base, and nearby Hotels etc arrnaged for them to stay over. Then perhaps there is a central room where Nortel/E&Y are based, and the bidders are invited to go in, in turn, to raise their bids and ask more questions. I doubt there is much room for maneouvre on the deals of the sale to wangle more value out of it at this point.

    As bidders alter their payments in terms of securities and cash and timings these would have to be taken into account and evaluated for acceptance too by the bid team.

    20 years ago these woudl have been smoke filled rooms full of dark corners and mutterings, like a spy novel. My imagination runs wild at this point.

    So, how do these things run in reality (fun pls here, this isn't an open invite for a bash!)
  • less
    Haha! I see Nortel esconced and sequestered in a Motel 8 broom closet with the lightbulbs removed, banging away on vintage Dell Latitudes connected via CAT4 cable to - ick - a Cisco router somewhere out there in the wild and tangled ether.

    The heavy breathing you hear is innocent, mind you; its merely execs working their Aralia stress balls in time to their heartbeats, practically willing Ciena to see the light (optical or.. you know...The Other Light, you decide) and walk toward it. Its The Way.
    "$500 mio is too low. We threw that much out in office supplies in 2000"
  • freqmgr
    Wow...I must have been fortunate indeed! My last Nortel boat anchor laptop was a 3 year old HP!
  • less
    Wow..I saw a few but never touched a single one. The Latitudes were far greener as they could accept no more than 512 RAM, I believe
  • name3380
    GSM auction is scheduled for today 11/24.
  • zeroman
    no stalking horse. thats pathethic
  • less
    Neigh. Nay. Er, nope, I mean.
  • borissss
    who are the bidders?
  • XPM_guy
    They don't say - just that the auction will be held today. Here's the press release:

    http://www2.nortel.com/go/news_detail.jsp?cat_i...
  • moreless
    Nortel Selects Ericsson and Kapsch as Successful Bidders for GSM/GSM-R Business
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