Telecom & Wireless
Should Ciena Be Pursuing Nortel Assets? (CIEN, NRTLQ)
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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:
The Nortel saga is a never ending one.
JON C. OGG
OCTOBER 5, 2009
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