Nortel’s Cupboards Almost Bare of Assets Now

By Mark Evans | Published: April 21, 2010

I had intended not to spend too much time on AAN with my consulting business rocking and rolling but I’ll take a hall pass with Ericsson’s plans to spend US$242-million to buy Nortel’s 50% + 1 stake in LG-Nortel Co., Nortel’s joint venture with LG Electronics – one of ex-Nortel CEO Bill Owens’ few successes.

“Today’s announcement is a positive step forward in securing a sound future for the LG-Nortel business and its valued customers,” Paul House, Chairman and General Manager, LG-Nortel, said in a press release. “Credit is due to the employees of LG-Nortel who have built this Joint Venture into a world class, profitable business.”

Earlier, Ericsson purchased Nortel’s CDMA and LTE R&D unit for $1.13 billion, and the assets of Nortel’s North American GSM business for $70 million.

With the sale of the LG-Nortel stake, the only major asset left on the table are the 3,000 patents – including the much-wanted LTE patents.

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  • bankrupt_bob

    3,000 X $1M = $3B
    3,000 X $10M = $30B
    hmmmmmmm? ;>)

  • fishymcdonk

    “…much-wanted LTE patents.”

    They have been up for sale for over year, everything esle is gone. I call BS on the “much-wanted”. Unless you were being sarcastic about it. Hard to tell.

    They also have some real estate to sell.

  • netasa

    I am asking again. How are you forgetting Netas?

  • closeshave

    Own It! Age Nortel math pretty much dictates that, by announcing the sale, Nortel just scored a stellar net profit of US$242 million for April, which means some well-earned exec bonuses are in order.

  • borissss

    I can offer 2 bucks for each :)

  • borissss

    10 minutes ago,Nokia-Siemens Networks announced that they have acquired the Netas stakes paying 20 billion.

  • closeshave

    That means more bad news for airplane flight over Europe as Nortel has been causing earthquakes and volcanoes to erupt with one industry-shaking paradigm after another.

    Bonuses! All around!

  • wasthere

    If nothings left to sell, why are we still paying a bunch of execs millions like if Nortel was still in business. Time to fire them on the spot ………. with no severance please !

  • wasthere

    I guess they need Netas revenues to make sure they can pay(with bonuses) Nortel exec's that are living like parasites on Nortel's carcass !

  • borissss

    I am not sure if we can say that siemens is ericsson's rival.
    I would rather prefer looking for a volcanoe near china to distract hueawei and zte.

  • wasthere

    ''Yildiz Is in Talks to Buy Nortel’s Turkish Unit, Sabah Reports -
    Jan. 14 2010 (Bloomberg) — Yildiz Holding AS, a Turkish company that owns Godiva chocolates, is interested in Nortel Networks Corp.’s plan to sell its Turkish unit, Nortel Networks Netas Telekomunikasyon AS, Sabah reported.''

    A sweet deal that turned sour !

  • scoop1985

    The Nortel 53% share was valued around $80M earlier this year. Although nice, it is more like some of the smaller (Alteon) asset sales versus the LG JV.

  • freqmgr

    Good idea to fire them…but I suspect that they have golden parachutes in place.

  • closeshave

    Well, there was a tremblor in China recently, which could be the key to a revealing substitution cipher..
    h-c h-n
    a-h u-o
    c-e a-r
    k-n w-t
    n-g e-e
    e-d i-l
    y-u

    Hm. It still needs some work.. like some people need… work and severance.

  • KayToo

    Would they not now have to do the stalking horse thing with the LG stake?

  • bankrupt_bob

    ….took me a while ;>)

  • exnt2

    bare cupboard except for skeletons and rotting flesh.

  • TongueInCheek

    No Stalking-Horse process required. LG-Nortel isn't part of the Bankruptcy Protection proceedings.

  • bankrupt_bob

    <<What Is A Patent Worth?>>

    http://www.patentlawinsights.com/2009/06/articl…

    …but this link simplifies the answer:

    http://www.mondaq.com/unitedstates/article.asp?…

    IF…. you're a rocket scientist or Nortel accountant.

    ;>)

  • bankrupt_bob

    …plugging in the numbers for Nortel, I calculate the value of the 3,000 patents at approximately $13.13E13.

    ;>)

  • KayToo

    OK the cupboard will soon be bare. But when does someone say, that in a world where establishing brands is increasingly difficult, because there is so much info noise out there, there is value in the skeleton and bring the moniker back to life. Just to create a logo with world wide recognition is a very expensive and exhaustive process.
    Compared to starting a company from scratch, there is a headstart to be gained here.

  • closeshave

    If Nortel's demise could be blamed solely on the dotcom bubble bursting and the global economic downturn, I'd say the idea of a resurrection wouldn't be quite 100% fantasy, but the name is now so tainted with chronic scandal, yet its perps are still around collecting the loot.

  • KayToo

    Yes I would agree there is much that is tainted but I think that would wash off the logo as the executive cronies vacate the premises. I think Nortel products have always been respected, even to the present. A little PR and bingo you have a clean brand.

  • closeshave

    lol – I'm always glad to help keep our telco minds sharp.

    Yep, its all a vast conspiracy…

  • wasthere

    Will Nortel patents portfolio be sold off at extreme discounts like most of their business operations were ? Hope it end up in a better scenario then the one organized by these idiots that ran the company to bankruptcy !

    http://247wallst.com/2010/02/19/vulture-watch-n…

  • freqmgr

    Keep in mind that although the cupboard may be bare NBS has a continuing business beyond the so called patent portfolio. They are contracting support to those other companies that acquired Nortel's assets. They also seem to be landlords, e.g. Avaya signing a 10 year lease for faciilities in Ottawa. While things such as leases can be sold that type of transaction can allow NBS to continue for quite some time. Lots of bonus money still to be paid and former employees to be cheated.

  • bankrupt_bob

    Primo find.

    I liked this part best:
    <<…stay tuned… Anything can happen in bankruptcy court.>>

  • whopperscan

    Disagree, I think the notion that Nortel's patents are substantially valuable, or even “much-wanted”, is not correct.
    If they were much-wanted, then, someone would have come forth long ago say “I want them” – in a serious way, not the nervous-nelly-nokia piddling around the edges way.
    No one has, QED, they are not much-wanted at all, and not very valuable.
    It's just another ruse for administrators, lawyers and consultants to keep milking fees. They'll drag it out for ages, make lots of fees, and sell if for stuff-all like everything else so far. The “prices” they have fetched to date are simply embarrassing.

  • protosphere

    3-4K of Patents are valued from a few hundred million to $1 billion.

    Estimated to generate around $950M over the next 15 years, assuming royalties of 1% from every LTE device sold.

    Much sought after but not worth much.

    I wonder if even RIM still wants them, they are considered a Canadian asset, will go route of Avro Arrow or that bonus happy Nortel will try and become a patent company from the ashes having liquidated everything tangible.

    …not much left, too much owing…maybe Ericsson will bid on them… regardless, thankfully gone bonus crazy Nortel will unfortunately come up plenty short for all they owe

  • freqmgr

    What are DMS patents worth? The world of tech has changed since then. LTE? What LTE patents? NT was never sure of what they wanted to do there. Provbably have more in the world of WiMAX.

  • exNTII

    so another year to wind down. or will it be two?

  • exNTII

    no such thing as Canadian asset anymore. the government will not interfere nor does it have the clout against the other regions.

  • wasthere

    Got to agree with this article. Nortel execs are a highly paid bunch that did built a non-profit organization : Nortel. This sale to Ciena was probably all fixed in advance and allowed them to be survivors of the shipwreck. Very good politicians indeed but with one of the poorest record of the industry in terms of profitability.

    http://www.von.com/news/report-slams-nortel-exe…

  • scalppeeler

    Summer of 2011

  • 4merEmployee22

    The BoD's can not fire them! The Executhieves will just sue NORTEL!
    Million dollars will just be wasted, instead of paying off some retired employees!

    How many BoD's left behind? Down to 3 from 9 members.

    Just remember…. one of them used to work for the E & Y, Inc. Lawfirm he he he!

  • exnt2

    not sure where this is coming from. many people moved from nortel outside of the acquisition. they built the company up prior to the acquisition. the general concern now should be on maintaining control over the acquisition before it turns out as MEN 2.0.

  • bankrupt_bob

    Another good find!

    Snakes in the grass, they are. ;>)

  • Nortel watcher

    the icing on this cake of an article would be if some Ciena people would contribute a comment or two corroborating the story's allegations

  • bankrupt_bob

    HP bought PALM (market cap just under $1B)… NRTLQ.pk market cap under $26M… what a day a difference makes.

  • protosphere

    NRTLQ.PK is a pink sheet over the counter junk stock that is practically worthless, delaisted everywhere else. Nortel reiterates they intend to cancel shares in this bankruptcy process, as there will be nothing left anyways. Zero even on the pink sheets after the last of their assets (depreciating patents) are gone and they thankfully cease to exist and keep lying and stealing after the largest fraud settlement in Canada.

    Trades at a nickle or .005 of a penny extreme 10X reverse split that was to entice institutions. Look at what they diluted in the past to pay themselves too.

    From the highest trade stock (accounted for 1/3rd of the TSX) to a bankrupt fraud dog where bonuses created this mess, fraud bonuses they voted to keep, bonuses paid throughout at every turn, and bonuses even after folding as they cut severances, with continued lies /contradictions. They migrated from innovation to how to get bonuses one VP indicated, they never shook the Roth envy even after ultimatum settlement they tanked with even further revisions.

    They also transferred themselves into positions at the buying companies they firesold their assets to, increased lawsuit insurance to $300M and what government would spend that much going against them.

    So many got ripped off as they fold to put the past and extended unreliable numbers behind them.

    What was done to stop fraud in Canada with this much legal power? Have any laws been changed as Manley's law firm of all people defend Dunn. …Unbelievable and endless.

  • protosphere

    Its shares at practically zero at .005 presplit, everything tangible is gone with no cusatomers or products, and around 1200 employees seeking “extraordinary bonuses” and only the patents left, how much more wound down can it get. =)

  • wasthere

    The only thing that's not winding down is bonuses. This robbery is endless !

  • bankrupt_bob

    'Nuff said! ;>)

  • protosphere

    “The report says that over the last several years, former Nortel executives have slowly worked their way into the Ciena organizational structure.

    The report goes on to say that those same execs appeared to have taken charge a while before the acquisition took place and that Ciena's ultimate survival may be dependent upon the ability of the veterans at the company to put down this “coup.”

    “…they are used to having unlimited funding. Any success that they had, according to the report, was mainly because of unrestricted budgets.”

    _______________________________________

    Can't say enough it is so endless… as Hackney (also a large bonus recipient and ex-CEO's pal) was arranged to transfer at Avaya an they aren't doing so hot, nor did hack for that matter.

  • freqmgr

    Ah, but they have their “on going” business via NBS to support those who bought the assets. Does anyone know how long those contracts/obligations are for? 1 – 2 years? Renewable? And NBS seems to becoming a landlord. True a lease can be sold along with the property but a ten year lease sounds like an ongoing business. I hope that isn't the case but it could very well be so.

  • wasthere

    Incredible ! After all this crappy situation, Nortel bonds(US) are still on the rise. Now trading above 82 cents on the dollar !

    http://www.investinginbonds.com/corporatebonds/…

  • Nortel watcher

    Can anyone confirm when CALA employees will transfer over to Genband payroll?

  • TongueInCheek

    When the transaction closes, it will set the date of transfer for assets, employees, etc. The last report is that transaction close is expected in Q2, so sometime in May or June.

  • wasthere

    Joel is a good talker but when it comes to deliver …..euh !!!! Will be remembered as the one in charge of a cost saving program that had an objective of 1 billion $ of savings at NT. This program was a total failure with may be a tenth of the objective meet. Nevertheless, he was promoted as the chief of enterprise business. Bonus wise though, he did pretty good !!!!!

    http://www.enterprisenetworkingplanet.com/news/…

  • protosphere

    Perhaps he will bring struggling Avaya to a new level too

    That will complete his minus -30% per quarter stellar results.

    Amazing the telecom green strangler and defrauding Motorola CEO pal got transferred let alone bonuses…. or is it?

    Everyones outraged at gag orders in the news lately calling it a totalitarian state as ex Liberal finance ministers Manley s defends Dunn (was suing a company he sat on the board of) also has a gag order in the courts as other ex-Nortel pirates board Cienna… when will the punch lines cease.

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