Telecom & Wireless

Should Ciena Be Pursuing Nortel Assets? (CIEN, NRTLQ)

We have been looking into the report from Ciena Corporation (NASDAQ: CIEN) late this morning that the company is in advanced discussions to acquire substantially all of the optical networking and carrier Ethernet assets of Nortel’s Metro Ethernet Networks business.  And early this afternoon came a press release from Nortel Networks Corporation (OTCBB: NRTLQ) that it is in advanced discussions regarding the planned sale of “substantially all assets within its Optical Networking and Carrier Ethernet businesses globally.”  This is certainly not a done deal, but we want to see if this operation is worth acquiring.  The answer of course is, “It depends upon the price.”  And the good news is that Ciena is not trying to takeover all of Nortel.

Ciena and Nortel both noted that any outcome of the Ciena-Nortel discussions “is uncertain and subject to negotiation of definitive agreements.”  Ciena also noted that the process would be subject to a routine competitive bidding process.  A potential problem with the bidding process is that this falls under the bankruptcy code under the laws of both the United States and Ontario, Canada.

The problem is that evaluating these businesses has become nearly impossible for outsiders as Nortel has been in a death spiral for almost the whole decade and most current data is buried inside court documents now at this point since it is under bankruptcy protection.  There are many questions to ask here, and they only scratch the surface in this case:

  • What customers are left?
  • How damaged are the relationships?
  • Have customers kept their obligations but made plans to drop them as a supplier?
  • Are the bankruptcy courts going to be cooperative?
  • Would Nortel creditors sue Ciena over the price?
  • And on, and on.
  • And on.

The Nortel saga is a never ending one.

JON C. OGG
OCTOBER 5, 2009

Get Ready To Retire (Sponsored)

Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future

Get started right here.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.