Posted by: Olga Kharif on June 22, 2009
On June 19, telecom gearmaker Nortel Networks announced it will sell some of its key assets to Nokia Siemens. The company also said “that it is advancing in its discussions with external parties to sell its other businesses.”
Essentially, all of Nortel is up for sale. If all these sales go through, as expected, Nortel will be no more. Until now Nortel’s execs have claimed that they will only sell a few divisions, and Nortel will emerge out of bankruptcy phoenix-like.
But industry insiders have long doubted viability of this scenario. It takes scale to compete against giants like Alcatel-Lucent and Ericsson in telecom equipment nowadays. And with every business sale, Nortel is losing its scale. At some point, it simply makes sense to liquidate the company than to try to be a minor player in a market where giants get all the customer wins.