As part of its restructuring plans, Nortel cuts lose part of its communication division
by Adam Zarboni
On June 19th, the day after failing to garnish federal support, and facing tough questions about executive bonuses, Nortel has sold its CDMA (Code division multiple access) and LTE (Long Term Evolution) Access assets for US$650 million to Nokia Siemens Networks (NSN). Both were forward looking research and development projects that looked to utilize 4G networks and new mobile technologies. The move appears to reflect the realization that Nortel must focus on its present core businesses at the expense of R&D.
Commenting on the sale, Nortel President and Chief Executive Officer, Mike Zafirovski said that with the sale they were preserving key Nortel technologies. "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."
Zafirovski continued: "We also believe this will help provide clarity for our customers and employees. Customers have demonstrated consistent support for our products and services, and we want to ensure they continue to benefit from Nortel's technology and know-how. In addition, Nortel's employees are doing a tremendous job under challenging conditions, stabilizing our business and delivering outstanding service to our customers. It is important to provide our employees with a clear sense of direction around their future and potential opportunities with the new companies."
Employees in the sector were assured by both Nortel and Nokia Siemens Networks of their job security. After announcing the deal, Mika Vehviläinen, Chief Operating Officer of NSN, posted a "personal greeting" on the Nokia Siemens site. In it he assured employees of the former Ottawa based communication technology giant, that "we want you." His tone is friendly, and almost grandfather like, and must have provided relief to many of the Nortel employees.
Mika Vehviläinen, Chief Operating Officer of NSN
Going on to explain why he felt it was a strategic acquisition, he said ". It is no secret that Nokia Siemens Networks has a lower market share in North America than we do in other parts of the world - and adding all of you from the CDMA team would help us gain scale in the region. Critically, it would also help us build stronger, deeper relationships with key customers."
Cautioning that the deal is not complete, he remains optimistic, "we still need to work through the appropriate processes before we can say this is a completely "done deal" - but I think we have reason to be optimistic about those processes and the possibilities of a shared future."
John Manley (CBC) on Nortel's future
Many of Nortel's business parterns have reacted positively to the news. Airvana, Inc.'s President and Chief Executive Officer Randy Battat said that he was pleased with the sale.
"The sale to Nokia Siemens Networks would place Nortel's CDMA business in the hands of a global wireless infrastructure provider with outstanding customer support capabilities," Battat said. "We expect to work in close partnership with Nokia Siemens Networks in the years ahead, investing in our EV-DO roadmap, supporting our product portfolio to fulfill customer needs, and continuing to deliver current and planned products and services to existing Nortel customers as well as new customers. We look forward to fulfilling the needs of wireless operators worldwide under this new relationship."