NSN and Avaya prowl as Nortel sinks deeper

The CEO of Canadian telecoms vendor Nortel has confirmed the company is in talks with several potential buyers over selling its divisions, as the company posted a US$507 million loss for the first quarter of this year.

“Decisions have not been taken and we continue to evaluate our restructuring alternatives. To provide maximum flexibility we are also taking the appropriate steps to complete the move to standalone businesses,” chief executive Mike Zafirovski added.

The company filed for bankruptcy protection in January and in April the vendor was granted an extension until July 30 to work out a recovery plan. It is currently undergoing a process to conclude the transition of its Carrier Networks, Metro Ethernet Networks, Enterprise Solutions and its LG-Nortel joint venture business units, a process that commenced in 2008.

According to news reports, Nortel declined a US$850 million offer by Nokia Siemens Networks in March for a large share of the carrier networks unit. Last week, reports suggested that enterprise communications firm Avaya was negotiating an agreement for Nortel’s enterprise unit, however, the two companies failed to close a deal.

The Toronto-headed company’s first quarter loss of US$507 million increased by 267 per cent year-on-year, up from a loss of U$138 million during the first quarter of 2008. Revenues decreased by 37 per cent year-on-year to US$1.73 billion, largely impacted by currency fluctuations. The company’s cash balance rose to US$2.48 billion compared to US$2.4 billion in December last year.

“We accomplished our initial objectives of maintaining our customer commitments and strengthening our operational performance. Network performance and customer service levels are at multi-year highs and customers are expressing their support of Nortel,” added Zafirovski.