Cisco rivals to bid for Nortel enterprise business today


Cisco rivals to bid for Nortel enterprise business today

Warwick Ashford

Canada's Nortel Networks, which filed for bankruptcy protection in January, is to auction off its enterprise networking business in New York today.

The business unit, which focuses on unified communications and VoIP, is the latest division of Nortel to go on sale as the beleaguered firm attempts to raise money to pay off its debts.

Last month, US business communications group, Avaya, indicated it would be willing to pay up to $475m, but today's auction is now expected to fetch more than $600m, according to the Financial Times.

Siemens Enterprise Communications, a joint venture by Siemens and US private equity firm, Gores Group, is expected to be Avaya's main competitor as both seek to boost their position against market leader, Cisco.

Analysts have speculated that other bidders may include MatlinPatterson and Cisco.

Wireless deal

Last month, Nortel won court approval for a $1.1bn deal with Ericsson, which outbid Nokia Siemens and MatlinPatterson for Nortel's core wireless assets.

Because Ericsson is a Swedish firm, the deal is still being reviewed to check it adheres to foreign ownership rules under the Investment Canada Act before it is given the final go-ahead.

The sale of the rest of Nortel's core businesses is expected to be completed by early next year.

Nortel posted second quarter revenues of only $1.97bn, a drop of 25% compared with the same period a year ago.

But the better than expected results were also a 14% increase from the previous quarter, which outgoing chief executive Mike Zafirovski said showed the company had stabilised in recent months.

Photo: Rex Features

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