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 Channel Futures

Best Practices


Nortel Enterprise Unit: Auction Set for Sept. 11

  • Written by The VAR Guy 1
  • September 9, 2009
It's ominous timing: Nortel's Enterprise Unit -- which focuses on unified communications and VoIP -- will be auctioned off this Friday, Sept. 11, in New York city. Potential bidders are expected to include Avaya and Siemens Gore. But will Cisco Systems come calling? The VAR Guy doubts it. Here's why.

nortel-enterprise-unit-auctionIt’s ominous timing: Nortel’s Enterprise Unit — which focuses on unified communications and VoIP — will be auctioned off this Friday, Sept. 11, in New York city. Potential bidders are expected to include Avaya and Siemens Gore. But will Cisco Systems come calling? The VAR Guy doubts it. Here’s why.

Here’s what’s known so far, according to the web site All About Nortel:

  • Avaya made a $475-million “stalking horse” offer but some people are suggesting the final price-tag could be as much as $800-million.
  • Nortel spokesman Jay Barta said there were “additional bids”, suggesting there are other bidders at the table.
  • The companies involved will make bids until no one decides to top the highest offer.

This news story, from IP Communications, goes into deeper detail — including the suggestion that Nortel’s creditors could place a bid.

Where’s Cisco?

So, will Cisco jump into the bidding? Frankly, The VAR Guy doubts it.

Cisco typically acquires up-and-coming companies rather than broken or under-performing businesses. Plus, Cisco typically benefits from customer defections when big, under-performing networking companies merge or buy one another (prime examples: Alcatel-Lucent, SynOptics-Wellfleet, Bay Networks-Nortel, and the list goes on…).

The wise bet suggests Cisco will continue to raid Nortel’s customer base without actually buying Nortel’s enterprise business. It’s a familiar strategy. In recent months, Avaya, F5 Networks and Juniper each have launched channel programs to recruit former Nortel Enterprise partners.

Next up, somebody will actually acquire Nortel’s Enterprise Unit. The bidding begins — and ends — on Sept. 11.

Follow The VAR Guy via RSS; Facebook; Identi.ca; Twitter; and via his Newsletter; Webcasts and Resource Center.

Tags: Agents Cloud Service Providers MSPs VARs/SIs Best Practices Networking

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7 comments

  1. Avatar Frankie Says September 10, 2009 @ 11:11 am
    Reply

    Spot on. No way Cisco bids.

  2. Avatar Nick Galea September 10, 2009 @ 11:45 am
    Reply

    Well buying the unit is definitely the quickest way for Cisco to access the Nortel customer base. Cisco do have some 30+ billion in cash just sitting there and the CEO has indicated that they wish to aggressively acquire companies.

    Personally i think this might be a good way for Cisco to spend a bit of its cash on a market it wants to dominate!

  3. Avatar The VAR Guy September 10, 2009 @ 11:58 am
    Reply

    Frankie Says: We’ll see if we’re both right…
    Nick: Shouldn’t Cisco use that money for growth-oriented companies rather than account acquisitions? The VAR Guy will be sure to give you credit if Cisco actually enters the bidding war tomorrow…

  4. Avatar Nick Galea September 10, 2009 @ 3:34 pm
    Reply

    Winning all those accounts one by one is a hard slog. Undoubtedly the better way but time is money. Plus Cisco still would have 32 billion left in the bank to buy growth companies 🙂

    They also recently bought jabber for +/- $200 mil and another exchange server compatible mail server company for $200 mil. In that light i think Nortel for 500-700 million is a steal. Yes, down and out, but still a lot of customers, technology and engineers to buy….. But you may very well be right that its not the type of company they would go for….just providing a different view point! 🙂

  5. Avatar The VAR Guy September 11, 2009 @ 8:21 pm
    Reply

    Nick: The VAR Guy hasn’t heard much today out of the bidding. But it sounds like Avaya and Siemens were the only two companies to place bid. Rather shocking that there hasn’t been more news about this today…

  6. Avatar Nick Galea September 12, 2009 @ 1:15 pm
    Reply

    Thanks for the update. Well it appears my theory was wrong then 🙂 I too am surprised that we have not heard any news about the auction…

  7. Avatar The VAR Guy September 14, 2009 @ 12:07 pm
    Reply

    Nick: Here are details about the completed auction, which Avaya won.

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