No matter what comes next, the once proud company known as Northern Telecom will never be the same.
They will either recover to remain an independent provider of infrastructure services, become insolvent and be forced to liquidate at a fire sale price, or be bought out by another company.
We believe that, with the state of the economy, carriers continuing to outsource to turn-key managed services options, the last option is most likely the only hope at this point for Nortel Networks. Ignoring their then stock price, it will likely be at a discount to their book value as the likely suitor will seek to buy them more for the maintenance contracts of existing infrastructure rather than their relationships or prospects for new sales. Nortel will likely thus be sold at a fraction of their worth as an telecom infrastructure provider and will instead represent an opportunity for a company to provide professional services and/or transitions to managed services once Nortel's customers decide to replace switching gear.
We believe that the most likely buyer is Ericsson as they continue to position themselves as a global force in outsourced telecom services. Ericsson could hold on to the maintenance of Nortel equipment, offering professional services and transition services to ultimately either provide their own gear on either a traditional capital expenditure and maintenance model or very likely a complete turn-key outsourced model.
We believe that the next likely buyer would be Nokia Siemens who also believes that the outsourced services model is the way forward to grow business, especially in the current economic environment.
If you have any thoughts or opinions about this let us know at Nortel@MobileIN.com
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