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Nortel, a fallen Canadian icon, starts asset sales
2009-07-24
TORONTO (Reuters) - Nortel Networks Corp, a former Canadian icon with roots going back to World War One, starts selling key assets on Friday in an auction that has already polarized opinion and sometimes reads like a soap opera. First on the block are Nortel's prized CDMA and LTE wireless technology assets, the latter of which includes technology coveted by the world's leading telecom-equipment makers. "The carcass of one of the leading high flyers for much of the last decade and a half is now up for grabs and to the victor go the spoils," said Carmi Levy, an independent technology analyst. "Even though Nortel has been a laughing stock for much of this decade, that hasn't stopped some of its most vicious competitors from emerging from the woodwork to claim their prize." In its heyday, Nortel was the most heavily weighted stock on the Toronto Stock Exchange, with a market capitalization of more than $250 billion. It filed for bankruptcy protection in January after years of job cuts, cost-cutting and restatements of its financial results. The assets up for grabs on Friday are seen as holding the key to the next generation of wireless transmission, potentially allowing broadband-like access for cell phone users once it is properly developed. Nortel has extensive patents on so-called MIMO, or Multiple Input Multiple Output technology, a form of antenna technology. If the technology becomes widely used in handsets, smartphone makers that do it best will be able to differentiate themselves from competitors, analysts say. Last month, Nortel announced a "stalking horse" bid for its CDMA and next-generation LTE wireless technology businesses from Nokia Siemens Networks for $650 million, setting a floor price for the assets. There are at least two other offers, including a $725 million bid from MatlinPatterson, a private equity firm that's also a major Nortel creditor. Sweden's Ericsson also came in at $730 million, according to a newspaper report. Canada's Research in Motion also says it is actively pursuing the assets and is in talks with stakeholders to find a way for a "generous" offer to be considered. Earlier this week, it complained that Nortel had effectively blocked an approach valued at $1.1 billion. Canada's government has come under pressure from politicians and even some of its corporate citizens to view Nortel's assets as strategic to national security, and to keep the company's assets in Canada by supporting RIM's bid. So far the government has remained at arms length, however, saying it will respect the court process to sell the former telecom giant's assets. Nortel filed for bankruptcy protection in January, blaming the economic crisis for derailing a turnaround effort that began in 2005 and which was the most recent of several bids to revamp the once mighty company. Nortel now employs about 25,000 people, a far cry from its heyday more than a decade ago, when its ranks were 90,000-strong. "This is sad ending chapter to one of the most successful stories in Canadian industrial history," said Levy. "It really does leave a huge legacy for all of us." Nortel's operations are divided about equally among the wireless business, the enterprise unit, which builds corporate networks, and the Metro Ethernet Networks unit, which makes Internet infrastructure and includes its optical and carrier ethernet technology. ($1=$1.08 Canadian) (Reporting by Pav Jordan; Editing by Frank McGurty)
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