One more candle down. And Canada won’t be celebrating. A shame really. Nortel has been Canada’s Telecom’s gem for decades, and not that long ago, Canada’s business gem. Now they are almost gone; Quite the fall from glory. They had a market cap of $350 billion just 10 years ago, and now, POOF.
Well, business is business, and I don’t want to lament on the outcome. Nortel has unfortunately been a victim of their own demise, and now it looks like Ericsson will end up with Nortel’s crown jewel – the CDMA business, which they acquired through a court monitored auction on Friday for $1.13 Billion. There were 3 bidding firms: Nokia Siemens, Matlin Patterson, and Ericsson. $1.13 Billion was almost double the initial offer made by Nokia Siemens, which demonstrates that there is value in Nortel’s assets. It seems like Ericsson came out of left field – they weren’t even mentioned until very late in the auction process. Ericsson and Nortel were aggressive competitors with Nortel the predominant North American CDMA player. This will certainly help Ericsson solidify their position in the market.
The next candle to fall will be the Enterprise business. Avaya submitted their initial bid last Monday for $475 Million, and there will no doubt be more bids.
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Nortel acquired exclusive distribution rights in Canada for a number of companies with investments and aggressive sales forecasts. After stocking product, the company would just sit on it and not attempt to sell it excluding the manufacturer from the Canadian market protecting it for themselves. In some cases, this limited the introduction of technology into the network and slowed the expansion of services. It will be interesting to see what happens in Canada now.