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November 23, 2009
Ciena to pay £462M for Nortel's metro Ethernet arm
Nokia Siemens loses out again
By Mikael Ricknäs
Ciena will pay £462 million ($769 million) for the optical networking and carrier Ethernet assets of Nortel Networks' Metro Ethernet Networks business.
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Ciena emerged victorious from an auction that took place over the weekend, beating Nokia Siemens Networks. In the end Ciena had to pay about $248 million more for the Nortel business unit than its initial bid, made public on 7 October.
The approval of the deal is set to be heard by bankruptcy courts in the US and Canada on 2 December, Nortel and Ciena said.
Nokia Siemens is now a two-time loser in the bidding for Nortel's assets. It previously lost out to Ericsson, which bid $1.13 billion for Nortel's CDMA (Code Division Multiple Access) and LTE (Long-Term Evolution) cellular network assets.
The market for carrier Ethernet equipment is growing, and has been defying the economic downturn, market researcher Infonetics said in a research note earlier this year.
Infonetics expects carrier Ethernet equipment r to grow to $34 billion by 2013, compared to $17 billion in 2008. That's a big cake, but many companies want a piece of it. Ciena will have to compete with the likes of Alcatel-Lucent, Cisco Systems, Ericsson-Redback, Extreme Networks and Huawei, according to Infonetics.
As a part of its bankruptcy proceedings, Nortel has been selling off the company bit by bit. Besides the Ericsson deal, Nortel sold its Enterprise business to Avaya for $900 million and sold software for wireless networks to Hitachi for US$10 million.
There are some parts remaining to be sold: Nortel plans to say more about the sale of its GSM (Global System for Mobile Communications) business this week.
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