Nortel continues to struggle; reorganizes again
Brampton ON-based Nortel Networks Corp. has sold portions of its optical components business as the company continues to struggle against the ongoing telecom doldrums. Nortel announced today that it has agreed to sell certain assets of this operating unit to UK-based Bookham Technology plc for US$108 million in common shares, debt, warrants and cash.
"This transaction is an important step in our path to profitability and our strategy to focus on the delivery of high performance, cost-effective optical network solutions for our customers," Nortel’s optical networks president Brian McFadden said in a news release.
While the equipment manufacturer is unloading key optical technology, it continues to tout the benefits of its wireless strategy. In an address to analysts last week, Pascal Debon, president of Nortel’s wireless networks division, highlighted the company’s strategy for delivering a converged network architecture. The telecommunications equipment maker’s strategy is based on packetized voice, IP networking and more spectrally efficient access technologies. During the address Debon said that Nortel’s architecture is designed to reduce the cost of transmitting network traffic by as much as tenfold.
While Debon touted the benefits of the company’s wireless strategy, Nortel announced another restructuring following another revenue warning. Late last month, the company warned that Q3 revenue would be 15 per cent lower than the previous quarter. The company had earlier warned that revenues would be 10 per cent lower than revenues achieved in Q2. The equipment maker then announced that it would reorganize its business into four units from three.
The former metro and enterprise networks division has now been divided into two separate units. The wireless and optical networks divisions remain the same. With this latest round of restructuring, speculation abounds that Nortel is either readying itself to sell its least productive unit or it will announce another round layoffs.
"As we continue to position Nortel Networks for profitability, the changes we are announcing today will result in an enhanced performance-driven business model that will ensure greater accountability and customer alignment," Nortel’s president and CEO Frank Dunn said in a news release.