Avaya, Nortel deal could create leader: analysts
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A merger between Avaya Inc.  and Canada's Nortel Networks Corp.  could create a leading vendor of Web-based phone systems, analysts said on Tuesday, as talk swirled over a possible buyout bid for the U.S. telecommunications equipment maker.
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(InfoWorld) - Strong corporate financials, eager venture capital, a liberal lending environment, and markets in transition continue to inspire buyouts and acquisitions in the IT world with Avaya and Palm beingÂ just two of the high-profile targets this week. The transition to new technology in telecom and the Web in particular opens up opportunities for vendors. Network equipment manufacturerÂ Avaya announced a dealÂ for a $8.2 billion cash buyout by private equity firms TPG Capital and Silver Lake Partners on Monday. "We are starting to see more of this kind of public-firm-going-private. We've seen this with Alltel most recently and cable television companies as well," said telecom analyst Jeff Kagan. Last month, TPG and Goldman Sachs Group's private equity unitÂ bought mobile service company AlltelÂ for $27.5 billion. The Avaya deal will allow it to make a potentially costly transition from legacy TDM products to IP technology without having to worry about the quarter-to-quarter bottom line. The timing of the deal was good. Avaya shares have been doing well lately, so the buyout gives shareholders top dollar. Avaya shares rose $0.31 to close at $17.02 Tuesday. "Avaya obtained an impressive value for shareholders," said Morgan Keegan analyst Tavis McCourt. Private equity firmÂ Elevation Partners' acquisition of 25 percent of PalmÂ also caused investors to cheer. Palm rose $1.48 to close at $17.57 Monday. Palm gets a $325 million investment and also several industry leaders: Jon Rubinstein, former senior vice president of hardware engineering and head of the iPod division at Apple, as well as Apple's former CFO, Fred Anderson. It is widely hoped that Rubinstein will be able to spark new ideas at Palm, which is suffering from competition against device makers Research In Motion and Nokia. Palm last week announced the Foleo, pitched as a mobile device "companion" product, but IT investors are waiting for more of a breakthrough device for the company's aging product line. In other acquisition news,Â Flextronics International said Monday it will acquire SolectronÂ for $3.6 billion. Flextronics said the deal will streamline product development and supply chain management and create an electronics manufacturing giant with more than $30 billion in annual revenue. But Flextronics slipped $0.16 to close at $11.54 on the news. Traders sometimes dump shares of acquiring companies when deals are suspected to have a negative impact on financials. Investment firm Hilliard Lyons downgraded its rating on Flextronics from "buy" to "underperform." Meanwhile, telecom-equipment maker UTStarcom dropped $0.80 to $6.51 after announcing Monday that it had done a strategic review and decided not to seek a buyout or merger. Though new technology may bring more opportunities, it may take a while before new products and services generate significant revenue for vendors. Almost halfway through the year, moderate growth is still anticipated for global IT in 2007 and recent surveys suggest that corporate spending may be even softer than had been expected. AÂ survey from ChangeWave Research released last week, for example, reported that the percentage of companies planning to increase their spending has fallen to its lowest point in the last four years. In this environment, where capital is available but market growth is slow, IT is bound to see buyouts and acquisitions continue.
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Analysts said the venture would create a drug benefit manager that could take on retail leader Wal-Mart
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The chief executive of Nortel Networks Corp. insisted Monday that the troubled telecom equipment giant will be able to compete with Chinese vendors doing similar work with lower-paid software engineers.
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Just as the AT&amp;T buy helped Cingular move ahead of Verizon Wireless to the top of the industry in terms of size, the new network would likely give it an overall faster network, a distinction most say Verizon can now boast.
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Motorola Inc  and Nortel Networks Corp  are in talks to combine their wireless infrastructure units, the Wall Street Journal reported, quoting people familiar with the situation.
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Telecommunications equipment maker Avaya Inc.  is in talks with private equity and strategic bidders about selling all or part of the company, according to a report by The Wall Street Journal.
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Motorola Inc. and Nortel Networks are discussing a joint venture that would combine their wireless network infrastructure divisions, according to a media report.
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How long can the wireless networking boom last? Not much longer, according to major competitors of Nortel Networks. Ericsson, the giant of the wireless industry, put a damper on stock markets yesterday when
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An acquisition of Avaya by Nortel might help the buyer expand its enterprise telephony business and pare down a crowded industry, but the deal could be tough for customers.
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Analysts will wade through the flood of revisions to financial data that Nortel Networks Corp.  is expected to unleash next week looking not so much for insights into its past, but for clues to its future.
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(InfoWorld) - Nortel Networks reached a definitive agreement to sell its UMTS (Universal Mobile Telecommunications System) business to Alcatel-Lucent on Monday, locking down a nonbinding agreement announced in September. The Brampton, Ontario, company is selling the 3G (third-generation) infrastructure business so it can focus on developing faster 4G mobile systems and supporting customers with earlier CDMA (Code Division Multiple Access) and GSM (Global System for Mobile Communications) technologies. "We didn't have the scale or momentum to be where we wanted to be and to be able to lead in this space," said Richard Lowe, president of Nortel's Mobility and Converged Core Networks unit. The deal is part of an overall restructuring kicked off by President and Chief Executive Officer Mike Zafirovski after he took over Nortel last year. The company is trying to cut costs to become more competitive and turn around years of poor financial performance. When Nortel signed a memorandum of understanding to sell the UMTS business earlier this year, Alcatel was in the process of closing its merger with Lucent Technologies Inc. Those companies closed their deal and became Alcatel-Lucent last Thursday. What Nortel now has is a binding agreement to sell the UMTS business, which it hopes to close by the end of the month. Alcatel-Lucent will pay US$320 million for the business, minus certain deductions and transaction-related costs. The timing of the agreement just days after the Alcatel-Lucent deal closed was a coincidence, said Alcatel-Lucent spokeswoman RÃ©gine Coqueran. About 1,700 employees from Nortel's UMTS unit will move to Alcatel-Lucent, the companies said. That includes substantially all the research and development team and a portion of other employees in other roles such as sales and support, Lowe said. Nortel will now focus its research on what it calls 4G technologies, including WiMax, EV-DO (Evolution-Data Optimized) Revision C, and the LTE (Long-Term Evolution) generations of UMTS, according to Lowe. All these eventually will deliver multiple megabits per second of bandwidth to mobile devices, he said. Â
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Telecoms equipment-maker Avaya accepts an $8.5bn takeover offer from private equity groups.
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Canadian telecom equipment giant Nortel  Networks Corp.  has signed a $2-billion (C$2.32  billion) supply deal with Verizon Wireless  to help the  carrier cope with an explosion in demand for broadband Internet  access.
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InfoWorld - An acquisition of Avaya by Nortel might help the buyer expand its enterprise telephony business and pare down a crowded industry, but the deal could be tough for customers.
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Nortel Network Corp.&#39;s board of directors was scheduled to meet last night to approve financial data that will be released this morning, giving the public its first look at the company&#39;s 2004 performance.
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Shares in Nortel Networks Corp. dropped 9 per cent yesterday after the telecom equipment giant, the subject of several Canadian and US accounting probes, hinted that rivals are taking a bite out of its market share.