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Roundup of Nortel bids: RIM exceeds highest bid by $375 million

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nortel_broken

At the moment, there are three major bidders for Nortel’s technology: RIM, Nokia and MatlinPatterson. RIM’s bid exceeds the leading bid by $375 million and Nortel is still dragging its feet. While Nortel is clearly holding off in the hopes of getting a better bid, it may hurt the company’s prospects in the end. If the company does not accept RIM’s bid, it stands to lose the $375 million and accept the next lowest bid. Lets take a look at all three bids:

RIM

RIM has offered to pay $1.1 billion US for Nortel’s CDMA and LTE technology. RIM is not only the largest bidder by far, but it is also a Canadian company, just like Nortel. Canadians can still remember when Nortel’s stock plunged and investors lost millions of dollars. It would be great to see this failed company pass along a Canadian made technology to a company that will employ Canadians and keep the investment local.

Nokia

Nokia Siemens Networks, a joint European venture, has offered to bid $650 million. While they have said they would raise this bid, it is still $450 million short of what RIM is bidding.

MatlinPatterson

MatlinPatterson is a US private equity firm who have offered to pay $725 million US. MatlinPatterson currently owns about 10 per cent of Nortel’s $4.2 billion US of debt. What’s nice about the MatlinPatterson offer, is that the company ultimately wants keep Nortel, a 127-year-old Canadian technology icon, intact as a single company.

Nortel’s bankruptcy auction falls under Investment Canada Act

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Canada has recently passed a new Investment Canada Act which gives the Cabinet the power to block a foreign corporate takeover in the interests of national security. While it may not be clear what constitutes “national security,” the Nortel auction is a clear example of where this act can be applied.

In RIM’s most recent press release, they outlined that they are on board with the Investment Canada Act and wish it to be applied. “RIM believes that the loss of Canadian ownership of Nortel’s CDMA and Long Term Evolution Access businesses may significantly, adversely affect national interests, with potential national security implications, and that the Government of Canada should review the situation closely.”

The Canadian Industry Minister Tony Clement doesn’t seem to be showing any interest in the matter and has publicly said he “cannot interfere” in Nortel’s legal court-managed U. S. Chapter 11 corporate reorganization.

Major bids for the CDMA and LTE techonlogy are coming from Finland’s Nokia. While Finland doesn’t pose a national security threat in the traditional sense, the lose of this technology will almost certainly have an adverse economic impact.

Implementing LTE technology on Canadian BlackBerry devices is going to give our economy a much needed boost of wireless infrastructure and pushing this technology forward is going to create jobs. The Canadian government is in a position to help a company that is creating jobs at home, rather than shipping our home grown technology abroad.

[Via]

RIM stock affected by Nortel rejection during bankruptcy auction

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RIM stock fell 1.43% to $81.99, after Nortel rejected their offer for CDMA and LTE technology being auctioned due to Nortel’s failing business.

The auction is part of bankruptcy protection proceedings and Nortel is claiming that RIM had refused to comply with the court approved procedures.

Overall, Canadian stocks are doing well, and the US economy is showing signs of stabilizing. Federal Reserve Chairman Ben S. Bernanke is optimistic, as all three major indexes in the US closed in positive territory.

The S&P 500 was up 3.45 points, or 0.36%, to 954.58 and the NASDAQ composite index closed at 1,916.20, up 6.91 points, or 0.36%.

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RIM barred from bidding on Nortel assets

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canadianfail

This economy is providing a great deal of opportunity for companies looking to acquire technology and profitable ventures that add to the books. Nortel is a company that has been in financial dire straits for years, and they are having a bankruptcy auction on July 24th, 2009, where RIM has been barred from making bids.

Nortel’s CDMA and Long Term Evolution Access businesses are up for auction, but RIM has been told it could be qualified for bidding only if it promised not to submit offers for other Nortel assets for a period of one year. In seeking to impose this condition, Nortel and its advisors were fully aware of RIM’s desire to purchase other Nortel assets as part of a solution to retain key portions of Nortel’s business under Canadian ownership. Despite repeated efforts, Nortel, its advisors and its court-appointed monitor have rejected RIM’s repeated attempts to engage in meaningful discussions.

A preliminary review, reveals RIM would be prepared to pay in the range of US $1.1 billion for the assets. This is a great deal for Nortel, which could use the cash, and it’s a great deal for RIM, which could use the CDMA and LTE technology to improve BlackBerry devices and infrastructure.

Jim Balsillie said “RIM is extremely disappointed that Nortel’s world leading technology, the development of which has been funded in part by Canadian taxpayers, seems destined to leave Canada and that Canada’s own Export Development Corporation is preparing to help by lending $300 million to another bidder. RIM remains extremely interested in acquiring Nortel assets through a Canadian ownership solution that would serve the dual purpose of keeping key wireless technologies in Canada and extending RIM’s leadership in the research, development and distribution of leading edge wireless solutions, but RIM has found itself blocked at every turn.”

Nortel is a failing company while RIM is both profitable and a source of Canadian patriotism. At this point, we should consider government intervention to move this deal ahead.

Nortel reports $3.4 billion loss, cuts 1,300 jobs

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Woo boy, I guess I was a little more right than I thought about more bad economic news; this time it hits a little closer to home.

­Canadian telecommunications equipment manufacturer Nortel Networks has posted a loss of US$3.4 billion in Q3 2008, it’s largest loss in the past seven years. Revenue was down 14% year over year to US$2.32 billion and 1% year-to-date.

Commenting on the market dynamics, Nortel President and Chief Executive Officer Mike Zafirovski said: “In September, we signaled our view that a slowdown in the market was taking place. In the weeks since, we have seen worsening economic conditions, together with extreme volatility in the financial, foreign exchange and credit markets globally, further impacting the industry, Nortel and its customers. We are therefore taking further decisive actions in an environment of decreased visibility and customer spending levels.”

Nortel also announced plans to cut a further 1,300 jobs, on top of a previous round of cuts of 1,200 staff. About a quarter of the job cuts will occur this year, with the rest in 2009. None of the remaining staff will receive pay rises in 2009, unless already agreed. The cost savings are expected to reduce annual gross costs by approximately US$400 million in 2009.

|via CN|

Nortel to kit out T-Mobile network for $150 mil

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NortelContinuing a strong relationship with the carrier, Nortel has signed on to extend its service of T-Mobile’s GSM network. This is not too long after getting a $135 million deal with Cricket Communications for CDMA2000 and EVDO Rev. A upgrades. Nortel’s doing a good job of offering a wide range of technology, but maybe spreading its efforts too thin, considering its stock has seen better days. Nortel’s kind of a big deal here in Ottawa, and Wireless Week is right to point out their drooping performance on the NYSE. I know a few folks in town who bought their stock and have been sorely disappointed.