Nortel Seeks Restructuring Deadline Extension to May 1

More time, please, so we can put together a reorganization plan that is going to work in these tough economic times. That is the message behind Nortel’s decision to try and obtain a three-month extension to the period it has been given to restructure under bankruptcy protection.

Nortel (News - Alert) spokesperson Mohammed Nakhooda told the Canadian Press that motions to extend the stay period to May 1 were filed late Thursday and will be dealt with next week. He said the extension is “” necessary to provide stability to Nortel's business while the company works to prepare a restructuring plan to see it emerge as a more focused and competitive company.

The news comes on the heels of Nortel’s decision to suspend its plans to sell its Metro Ethernet Networks (MEN) unit as it begins its restructuring under bankruptcy protection.

“The previously announced potential MEN divestiture has been put on hold while the over-all business plan is being developed,” Nakhooda told Reuters (News - Alert), who carried the story.

 

The wire service said that analysts had speculated the division, which includes Nortel’s optical and carrier ethernet technology, could fetch as much as $1 billion. The growing business – which accounts for roughly 14 percent of Nortel’s revenue – was put up for sale in September, but no bids have materialized.

 

The financial situation hasn’t dissuaded customers from buying new and existing products, which are proving popular. More than 1,000 units of the Business Communications Manager 450 hybrid-IP solution, introduced last fall, have already been shipped. Wes Durow, Nortel Vice President, Enterprise Global Marketing calls this “the fastest ramp ever on a Nortel VoIP solution.”

 

Nortel says the results demonstrate strong global demand for a solution that connects people faster, improves collaboration and speeds time to decision for firms with up to 300 employees. The BCM 450 product helps medium-sized businesses more easily and cost-effectively transition to unified communications, which saves them up to 70 percent of their original investment by reusing their existing equipment.

 

Judging from the success of the BCM 450, and of ITEXPO East, a ‘new Nortel’ may be one that focuses on VoIP and wireless from the carrier and enterprise networks solutions, yet able, as shown by that new solution, to accommodate and to migrate customers from legacy technologies.

 

There is growing interest in both IP and wireless as organizations seek to cut costs and increase flexibility. The hundreds of millions to billions of dollars promised by governments for rural/remote area broadband expansion, focusing on the last mile to communities and homes may well mean wireless for all practical purposes.