Ericsson wins auction for Nortel assets

Sweden's Ericsson has won an auction for the wireless assets of bankrupt Nortel Networks in a deal valued at $1.13 billion, Nortel said on Saturday.

• The proposed sale, announced by Nortel in a news release, means Ericsson will own the Canadian company’s key CDMA and next-generation LTE wireless technologies, which it put on the block after filing for creditor protection in January.
• Nortel said Ericsson will offer continued employment to a minimum of 2,500 Nortel employees. The statement did not say how many employees worked for the Nortel businesses that the company agreed to sell, and a spokesman was not immediately available for further comment.
• Last month, Nortel announced a “stalking horse” bid for the assets from Nokia Siemens Networks for $650 million, setting a floor price for potential buyers.
• BlackBerry maker Research In Motion also waded into the fray by announcing it was chasing a deal for the Nortel technology. But it complained that Nortel had effectively blocked an approach valued at $1.1 billion.
• Nortel fired back by saying RIM was refusing to comply with common confidentiality provisions that other bidders had agreed to follow.
• Toronto-based Nortel, once North America’s biggest maker of telephone gear, filed for bankruptcy protection early this year, blaming the economic crisis for derailing a turnaround effort that began in 2005.
• Even before the economy hit the skids, Nortel had posted billions in losses and was forced to cut tens of thousands of jobs in hopes of reversing its moribund fortunes.
• However, these measures were not enough to offset a plunge in demand for its products from corporate clients and from wireless carriers that use its technology to operate their networks.
• Rivals like Alcatel and Lucent consolidated as Nortel sat on the sidelines, while Asian competitors captured market share with their lower-cost offerings.
• Nortel now employs roughly 25,000 people, down from 90,000 at the height of the technology boom at the start of the decade.
• Nortel now appears sure to sell itself in pieces rather than restructure under creditor protection to emerge as a scaled-down version of its former self.
• The company was once the poster child in Canada for high tech success and was the most heavily weighted stock on the Toronto Stock Exchange. Its shares on a consolidation-adjusted basis were worth more than C$1,100 each in mid-2000.
• Today, the stock has been delisted from the major exchanges and are changing hands at less than 10 Canadian cents each.
• The proposed sale is subject to joint of approval of U.S. and Canadian courts, scheduled for July 28.