Ciena Beats Nokia Siemens for Nortels Ethernet Assets

Kelly Teal, Contributing Editor

November 23, 2009

1 Min Read
Ciena Beats Nokia Siemens for Nortels Ethernet Assets

Ciena Corp. (CIEN) has defied the odds to win Nortel Networks’ Metro Ethernet Networks business at auction, and, best of all, the workers in those units will get the chance to keep their jobs.

Ciena this weekend plunked down $530 million in cash and $239 million in convertible notes to beat out rival Nokia Siemens Networks, which had the backing of a JP Morgan Chase private equity group. The outcome in Ciena’s favor flaunted some predictions from analysts, who didn’t think the telecom gear maker would be able to pay much more than the $521 million it pledged to kick off the auction. Ciena in September reported another in a string of quarterly losses, this time to the tune of $554.5 million, due to the recession and subsequent restructuring.

However, despite some concerns over integration and cost controls, there has been almost universal agreement that Ciena is the best company to take over Nortel’s Ethernet properties. That’s because the Maryland-based company now gains geographic reach, Nortel’s customers and access to partnerships with companies including IBM. Thus, Ciena’s target markets will expand from just carriers to financial services.

Meanwhile, perhaps the most advantageous aspect of Ciena’s win is that at least 2,000 Nortel employees – including those overseas – will get job offers from Ciena.

Nortel and Ciena will head to court on Dec. 2 to secure court approvals for the sale in Canada, France, Israel and the United States. And they’ll still need to work with regulators and unions before they can close the transaction, something they hope to do in the first quarter of 2010.

As with Nortel’s previous auctions, shareholders won’t get a cut of the proceeds.

Read more about:


About the Author(s)

Kelly Teal

Contributing Editor, Channel Futures

Kelly Teal has more than 20 years’ experience as a journalist, editor and analyst, with longtime expertise in the indirect channel. She worked on the Channel Partners magazine staff for 11 years. Kelly now is principal of Kreativ Energy LLC.

Free Newsletters for the Channel
Register for Your Free Newsletter Now

You May Also Like