Nortel Optical Unit Set for Ciena-Nokia Siemens Tussle?

Ciena Corp. (CIEN) may have competition for ownership of bankrupt Nortel Networks’ optical networking business.

News reports this week say Nokia Siemens Networks (NSN) also wants Nortel’s Metro Ethernet Networks (MEN) unit. The telecom equipment supplier will have to make up its mind soon – all bids are due Nov. 9 and the auction is scheduled to take place later in the month.

In October, Ciena received bankruptcy court clearance to make the first offer at auction. Ciena is prepared to pay $521 million. The Maryland-based company has been eyeing Nortel’s MEN since early this year. To that point, last March, Nortel put a planned sale of MEN on hold as word broke that Ciena, which has been dealing with lower sales numbers over the past two years, was prepared to buy the unit for $300 million. Nortel originally wanted to get $1 billion out of the division.

Now it looks as though Nortel will net at least half that number. With Ciena ready to plunk down $521 million, any other serious offers would have to exceed that number. That’s good news for Nortel but not necessarily for its pensioners, who are far down the list of creditors to be paid by their bankrupt former employer.

Word of Nokia Siemens’ interest comes as the company, owned by Nokia Corp. and Siemens, announced a major restructuring effort and worldwide layoffs of up to 6,000 people. The joint venture is bleeding money as it struggles to compete against lower-priced and larger competitors in a recession.