Implications of HP’s 3Com Buy for Other Networking Players

As I mentioned yesterday, HP didn’t get revolutionary, game-changing products and technologies from its $2.7-billion acquisition of 3Com, a company that has gone through more reinventions and market repositionings than Madonna.

In 3Com’s long and eventful history, it has gone from providing the original Ethernet adapters and hubs for enterprises and small businesses, to an acquisition of Chipcom for its chassis-based hubs and switches, to deserting the enterprise market entirely — even directing its jilted corporate customers into the outstretched arms of Extreme Networks.

Subsequently, after a dalliance with consumer markets, 3Com focused on the SMB space before coming back to enterprise markets in its H3C joint venture with Huawei.

That joint venture is now deceased, with 3Com having bought out Huawei’s interest. It now competes against its former partner for the patronage of customers in China and elsewhere. (This is an important point that some people have gotten entirely wrong. 3Com and Huawei no longer are partners in H3C. The loss of Huawei-related business in China represented a serious drag on H3C revenue and necessitated the “China Out” strategy that 3Com pursued.)

Nevertheless, 3Com was reborn on the foundation of cost-effective Chinese engineering, which I believe was a big draw for HP.

Putting all that aside, what does HP’s buy of 3Com mean for smaller vendors in the marketplace, those left out of this latest installment of industry consolidation?

Let’s start with Juniper, one of the bigger independent networking vendors still on the board. As long as it continues to build on its data-center strategy, and to strengthen its partnerships with IBM and Dell, it should survive HP’s onslaught.

Recently, Juniper underwent a rebranding and repositioning of its own, albeit not as dramatic or radical as some of 3Com’s transformations. Juniper overriding message is that it presents a flexible, intelligent, and open alternative to the closed, proprietary systems offered by data-center behemoths Cisco and HP.

To get that message across, Juniper has introduced open, programmable capabilities in its flagship JUNOS software. It also announced new JUNOS chips and systems, including the JUNOS One line of processors and JUNOS Trio chipset with “3D Scaling,” a technology that provides dynamic support for additional subscribers, services, and bandwidth.

Juniper also unveiled new JUNOS-based cloud-networking and security products, including enhancements to Juniper’s SRX Services Gateway as well as modules, implementation guides, and best practices for building a “Cloud Ready Data Center.”

You can see what Juniper is attempting to do.

As much as its server-vendor partners, especially IBM, would like networking hardware to be interchangeable, standards-based commodities managed by an intelligent layer of data-center orchestration software, Juniper is seeking to make itself indispensable by providing its own layer of software intelligence riding atop the network fabric. If it can sell IBM and Dell on the necessity and value of that software, and it can develop and expose interfaces to complementary software its partners are promoting, all should be well and no nasty divorces will ensue.

To survive and perhaps to prosper, Juniper has to execute on its plan and maintain its partnerships.

Now let’s consider Brocade. Reports indicated that HP considered Brocade as an alternative to 3Com. Obviously, HP chose the latter, and I think the decision turned on the lower cost of goods and margin flexibility that 3Com’s enterprise-switching products offered relative to Brocade’s Foundry enterprise-networking gear.

There have been rumors that Dell might buy Brocade, but I think you can discount, if not dismiss, such speculation. Dell is content, for now, to stay with its partnering approach in filling out its data-center strategy. It seems to be mimicking IBM, following a similar plan and establishing similar technology alliances and partnerships. Dell has priorities other than big-ticket computer-networking acquisitions, and I can see it buying storage- and virtualization-software companies well before it gives consideration to a networking buy.

So, despite its best efforts to flog itself, Brocade appears orphaned.

The same story applies to Extreme Networks, which is left without a bigger corporate home to move into. Like Juniper, Extreme seems to have had a good indication where the industry — and perhaps HP — was heading, because it recently restructured and retrenched to significantly reduce its operating expenditures.

Extreme will suffer from the broader consolidation in the industry. Its first priority is to defend its installed base from competitive incursions.

What about WAN-optimization vendor Riverbed and application-delivery-networking (ADN) leader F5 Networks?

F5 probably isn’t for sale — it has been dogged by takeover rumors for years — but neither 3Com nor HP competes meaningfully on F5′s specialized turf. This deal means nothing to F5, which probably will maintain its long-running partnership with HP. If you liked F5 before this deal was announced, you have no reason to dislike the company today.

The story is similar, though not identical, for Riverbed, whose WAN-optimization products also have no direct competitor in the ProCurve or 3Com product portfolio.

So, there you have it.

HP’s acquisition of 3Com is only slightly damaging to Juniper, whose fate will turn on the success of its strategic direction with JUNOS and its partnerships with IBM and Dell.

For different reasons, the deal will have significant negative implications for Brocade and Extreme Networks. Finally, the deal is neutral for, and really doesn’t affect, F5 and Riverbed.

Some of you might be wondering about how this deal affects Cisco. I don’t think it really adds anything lethal to HP’s product portfolio, especially in relation to data-center convergence, but the lower-cost networking products likely to flow from 3Com’s Chinese engineering operations will put price pressure on Cisco’s margins.

At the end of the day, though, Cisco — which is pursuing a large number of “market adjacencies” and is suffering from attenuated focus in its legacy markets — might well become its own worst enemy over the long haul.

Fortinet IPO Next Week

Fortinet will have its IPO next week, with its shares trading under the symbol “FTNT.”

IPO Interactive is rating the Fortinet initial offering as “hot.”

I have had the Fortinet prospectus in hand for a while now, and I’ll be providing my assessment of the company and its stock shortly.

Questions Surface About Irregular 3Com Options Trading Before HP Acquisition Announced

Questions are surfacing regarding unusual trading patterns in 3Com options ahead of yesterday’s announcement of its $2.7-billion acquisition by HP.

Dow Jones Newswires reports that, under normal circumstances, 3Com’s options are rarely traded, with just a few hundred contracts changing hands daily. On Wednesday, however, 3Com options activity spiked to 13 times the normal volume.

Coincidence? Jon Najarian, co-founder of OptionMonster, said he doesn’t think so:

“Since I do not believe in coincidences on Wall Street, I would bet that these unusual call option trades will spark an investigation.”

As reported by Bloomberg:

Volume in contracts to buy shares of the Marlborough, Massachusetts-based company surged to the highest level since September 2007 before Hewlett-Packard Co. said it would buy the maker of computer-networking equipment for $2.7 billion.

“I don’t believe in that much luck,” said Steve Claussen, chief investment strategist at OptionsHouse LLC, the Chicago- based online brokerage unit of options trading firm PEAK6 Investments LP, and a former market maker at the Chicago Board Options Exchange. “If you’re on the other side of someone buying calls and a takeover is announced, it’s like someone held you up at gunpoint. It’s like you’ve been robbed and you feel violated.”

Call options, conveying the right to acquire stock for a given price by a certain date, usually offer higher returns to traders speculating on takeovers. The Securities and Exchange Commission (SEC) is responsible for policing the options market to discourage and identify insider trading, which — if you think about it, and as Mr. Claussen contends — is a form of larceny.

Regrettably, the SEC apparently wasn’t policing anything yesterday, having been closed for Veteran’s Day.

More from Bloomberg:

More than 8,000 3Com calls changed hands yesterday, 17 times the four-week average. The most active were contracts conveying the right to purchase 3Com for $5 through Nov. 20, followed by December $5 calls. The shares rose 5.2 percent, the most since Sept. 28, to $5.68 in Nasdaq Stock Market composite trading prior to the announcement.

Almost 4,000 of the November $5 calls and 3,300 December $5 calls traded, with almost all of the transactions occurring at noon. That compares with a total of six puts giving the right to sell 3Com shares. Hewlett-Packard, the world’s largest personal- computer maker, agreed to pay $7.90 a share in cash for 3Com, a 39 percent premium to yesterday’s closing price.

More than 22 million shares of 3Com changed hands in the stock market yesterday, compared with this year’s daily average of 4.85 million and the most since March 2008. Trading was heaviest in the hour after 11 a.m. in New York, data compiled by Bloomberg show.

Some have suggested that the call trades might have resulted from “calendar spreads,” in which an investor sells contracts expiring in one month and buys options with the same strike price for a future date. However, that seems unlikely considering that November contracts would not have expired for another nine days.

According to Bloomberg, Goldman Sachs Group Inc. advised 3Com on the transaction and Morgan Stanley served as HP’s agent.

As reported by the New York Times, 3Com is one of several companies that featured in the insider-trading case involving Raj Rajaratnam and the Galleon Group. Traders from Incremental Capital allegedly gained information on 3Com’s previous attempt to sell itself from a lawyer working on the aborted deal with Bain Capital and Huawei, formerly 3Com’s business partner in the China-based H3C joint venture.

The SEC needs to seriously and thoroughly investigate this matter.

HP’s ProCurve Engineers Might be Biggest Losers in 3Com Acquisition

I will have a longer post tomorrow on HP’s acquisition of 3Com for $2.7 billion, but my first reaction, I will readily admit, was befuddlement.

3Com no longer has a relationship with Huawei, will experience declining market share in China, and is pursuing a “China Out” strategy to compensate for lost business in that country. It also has a tarnished enterprise brand in North America, which probably will lead HP to retire the 3Com name completely.

So I thought about it. HP must have had a reason to pursue this acquisition.

Then, all of a sudden, it hit me. I remembered a Forbes feature article published online in the middle of October,”Cisco’s Threat From China,” and I realized that Mark Hurd’s HP is all about cost controls, preferably sharp and sustained cost reductions.

Look, HP could have obtained better routing technology, greater routing market share, and superior core data-center switching from an acquisition of Juniper Networks.

Then again, an acquisition of Juniper would have cost HP about six times (or more) what it paid for 3Com. That was considered too high a price, I’m sure, by Hurd and his bean counters.

Besides, 3Com offered something that no other enterprise-networking vendor could provide to HP. Quoting from that Forbes feature article:

Most of 3Com’s 6,000 employees, 52% of its $1.3 billion in revenue and nearly all of its research and development staff are in China. While 3Com has only a 3% slice of the networking gear market worldwide, it controls a third of China’s market–just a few percentage points less than Cisco.

Forget about the revenue from China. That’s under siege now that 3Com doesn’t have Huawei as its H3C partner. What’s important here is that most of 3Com’s employees, and all its research and development, are based in China. I’ll have harder numbers tomorrow, but my conservative calculations suggest that a fully loaded Chinese networking engineer probably costs about a fifth the price of his American counterpart.

What hasn’t been mentioned by HP, or by the business press, is that there is significant overlap between the HP and 3Com product portfolios everywhere but in the data-center core, where 3Com has the H3C S12500 . Before this deal, HP even targeted 3Com heavily in its competitive-marketing programs.

All of which brings me to what I suspect is the essential truth about HP’s acquisition of 3Com. When you look at the cold, hard facts, it’s difficult not to conclude that HP purchased 3Com at least as much for its low-cost Chinese R&D as for its product portfolio, which features extensive overlap with HP’s own ProCurve products.

The big losers in this deal might not be Cisco, or Juniper, but HP ProCurve engineers in the USA.

Motorola Division Up for Sale: WSJ

Sources have told the Wall Street Journal that Motorola is preparing to sell its home and networks mobility division for approximately $4.5 billion.

The article, quoting “people familiar with the matter,” says potential acquirers include private-equity firms and telecommunications-equipment vendors.

Allegedly among the private-equity firms considering the purchase are TPG and Silver Lake Partners, both of which are said to be attracted to the division’s continuing profitability. On the other side of the aisle, equipment vendors said to be candidates to purchase all or part of the division include South Korea’s Samsung Electronics Co., China’s Huawei Technologies Co., Sweden’s L.M. Ericsson and Pace PLC of the U.K.

Not surprisingly, neither the private-equity firms nor the gear vendors have anything significant to say about their rumored interest in Motorola’s assets.

J.P. Morgan Chase & Co. and Goldman Sachs Group Inc. are said to be advising Motorola on the sale of its home and networks mobility division, which is now Motorola’s largest.

It includes core and edge network products, such as two-way digital video headend systems and bandwidth-management systems, along with related software; access-network products and technologies, including those supporting GPON (Gigabit Passive Optical Networking), CMTS (Cable Modem Termination Systems), BAN (Broadband Access Network) and FTTx (fiber to the home or enterprise); wireless-network infrastructure for 3G and 4G networks, including LTE and WiMAX; and customer-premise equipment, such as digital set-top boxes, DSL and cable modems, residential gateways, and WiMAX modems.

Considering that the division’s product portfolio is so varied, it’s conceivable that it Motorola could sell parts of it to at least two different buyers. For example – and this is only hypothetical – Samsung or Pace might purchase the customer-premise equipment and the access-network products and technologies, with Ericsson or Huawei buying the wireless-network infrastructure. Alternatively, Motorola might decide to keep the wireless infrastructure and sell the remainder of the division.

The mooted sale of the home and networks mobility division follows a nosedive in Motorola’s financial performance that effectively torpedoed the company’s plans to spin off its handset business, which hasn’t had a hit since the Razr climbed to the top of the sales charts several years ago. Of course, Motorola is hoping that its geekily marketed Droid smartphone reverses its declining handset fortunes.

Motorola says it maintains its commitment to a long-term plan that would split the company into two businesses: mobile devices and broadband mobility solutions.

Abundance and Variety in Defunct VC-Backed Companies

The list probably is not exhaustive, and the year isn’t finished, but the Wall Street Journal’s Venture Capital Dispatch is offering an ongoing inventory of venture-backed companies that have closed shop in 2009.

I tried to discern a pattern from the tombstone epitaphs in the venture-backed cemetery, but I couldn’t see one. Among the departed you’ll find late- and early-stage companies, firms involved in corporate and consumer technologies, biomedical and pharmaceutical concerns, and even a smattering of cleantech ventures.

You’ll find that many were backed by major VC firms, and some were financed by lesser-known players. The only underlying commonality is that all saw their funding dry up during a severe, and now apparently protracted, economic downturn.

Adobe Cuts More Employees

Adobe continues to shed staff with alarming regularity.

In a regulatory filing submitted to the Securities and Exchange Commission (SEC) last night, Adobe disclosed that it would cut 680 full-time employees, about nine percent of its global workforce.

Said Adobe in a statement:

“Adobe is restructuring its business to align costs with its fiscal 2010 operating plan and budget, the company’s three-year strategic priorities, and the realities of the business environment, as well as to ensure its ability to continue investing in long-term growth opportunities.”

This latest payroll purge follows a nine-percent workforce reduction within the Omniture unit, which had about 1,200 employees when it was acquired by Adobe in September. Before that, in December of 2008, Adobe announced that it would part with approximately 600 employees after the disappointing sales performance of its Creative Suite 4.

Since then, Adobe’s fortunes have waned more than they’ve waxed. The company has experienced decreasing revenue and earnings in recent quarters, with its top line taking a particular beating. In the absence of growth, Adobe has taken to vigorous cost reductions, which have included a yearlong drumbeat of job cuts.

The company’s words and actions suggest that it doesn’t anticipate a near-term rebound.

Logitech’s LifeSize Buy Represents Logical Progression

Logitech, best known for computer peripherals, has announced the acquisition of videoconferencing vendor LifeSize Communications for $405 million in cash.

Whereas Tandberg, currently the object of Cisco’s ambivalent acquisitive interest, makes its money selling midrange to high-end videoconferencing systems, LifeSize concentrates primarily on device-based personalized videoconferencing products within the budgetary reach of SMBs. At the very high end of the enterprise market, we find Cisco with its customized, room-based telepresence systems.

LifeSize has some higher-end product offerings in its portfolio, but its device-based products will be better suited to Logitech money-making prowess. Logitech’s expertise is in designing, making, marketing, and selling (through its vast channels) computer peripherals such as mice, keyboards, and webcams.

It’s that latter product group that shares an affinity with LifeSize’s device-based videoconferencing. No doubt Logitech will push LifeSize’s current offerings through its existing channel partners while working on next-generation products that further broaden the availability and market reach of high-quality, low-cost personalized videoconferencing.

Logitech gradually is attempting to ascend the videoconferencing value chain. Last fall, Logitech paid about $30 million to acquire SightSpeed, a vendor of software-based videoconferencing software. Following up on that purchase a year later, Logitech now has moved up to acquire a device-based videoconferencing vendor.

Still, Logitech doesn’t have the profile, relationships, or resources to take LifeSize into battle against Cisco, Tandberg, or Polycom in more sophisticated room-based systems. Logitech doesn’t have the DNA, or the customer mandate, for that fight.

Notwithstanding the ceiling on how high Logitech’s reach can extend, the Swiss vendor of peripherals is well placed to make a lucrative push with most of LifeSize’s small-form-factor, device-based products. Those offerings fall comfortably within Logitech’s wheelhouse.

All in all, LifeSize was a logical next step on the acquisition trail for Logitech. The combination should result in increased sales of the LifeSize product portfolio into SMB accounts and even into the high-end consumer sphere, though I suspect one motivation for this move by Logitech was to lessen its dependence on the clapped-out consumer space.

Ciena Acquisition Bid Approved, but Nortel Postpones MEN Auction

Even though Ciena has received regulatory clearance to proceed with its proposed acquisition of insolvent Nortel Networks’ Metro Ethernet Networks (MEN) business assets for approximately $515 million in cash and stock, Nortel has deferred the bankruptcy-auction process in the hope that another bidder will emerge.

Bids were due yesterday for Nortel’s MEN assets, but Bloomberg reports that Nortel has extended the deadline by as many as five business days.

Clearly Nortel’s creditors believe, or hope, another bidder can be coaxed from the wings.

Murmurs surfaced last week that Nokia Siemens Networks (NSN) might take a run at Nortel’s MEN assets, but, as far as we know, the Finnish-German joint venture hasn’t thrown its binational hat into the auction ring. At one point, before NSN was said to be prepared to bid for Nortel’s MEN assets, reports circulated that Siemens, and perhaps even Nokia, wanted out of the joint venture entirely, discouraged by abstemious telecommunications spending and intensifying competition from rising Chinese vendors Huawei and ZTE.

Ciena’s stalking-horse bid, submitted last month, included $390 million in cash and 10 million shares of common stock. When Ciena first tendered its bid, its offer was worth approximately $521 million, but the value has declined slightly in the interim due to the fluctuating value of the company’s shares.

Until now, Nortel has sought cold hard cash for its business assets auctioned off under bankruptcy protection. It got $1.13 billion from Ericsson for its wireless assets and $915 million from Avaya for its enterprise business, though the latter transaction must pass an ongoing review by the Canadian government.

When CIena’s stalking-horse bid included stock, many observers felt it was a sign that Nortel didn’t expect heated competition for its MEN assets, which at one time were viewed as the company’s “crown jewels.”

Those jewels apparently are tarnished, because it’s becoming clear that Nortel is having to pull out all the stops — and then some — to persuade another party to join Ciena at the auction table.

The lack of competing bids has been good news for CIena, which was warned by analysts, including Mark Sue of RBC Markets, not to fall victim to the “winner’s curse” of overbidding to claim ownership of an asset.

Perhaps Nortel’s creditors have reason to believe another bidder is almost ready to declare interest, or maybe they’re just hoping one materializes. Whatever the case, the situation will be resolved soon enough.

Cisco’s Pointless Procrastination in Tandberg Deal

Cisco continues to behave curiously in its ambivalent takeover bid for videoconferencing-systems vendor Tandberg.

Cisco announced yesterday that it would extend its current $3-billion offer, valued at 153.50 Norwegian kroner per Tandberg share, until 5:30 pm CET (1630 GMT) on November 18. If, by that time, Cisco has not received tenders for 90 percent of Tandberg’s shares, the deal cannot proceed and Cisco will have to make its next move. Cisco has said repeatedly that it might just step away from the table and abandon the deal.

As of today, Tandberg stockholders have tendered only about 9.3 percent of the Norwegian company’s shares to Cisco at terms pursuant to the existing offer. That means more than 90 percent of Tandberg shareholders are holding back. A bloc in possession of about 30 percent of Tandberg’s shares is steadfastly opposed to the deal. That group has asked Cisco to produce a sweetened bid of at least 170 kroner per share.

Considering the arithmetic and the entrenched group dynamics, Cisco must know that the existing proposal will not win the necessary approval in the next eight days. A monkey with an abacus could figure that out.

All of which leads to an obvious question: Why has Cisco chosen to wait another eight days before it takes action? I’m not seeing method in the madness. What I am seeing is muddle.

Dissident Tandberg shareholders will hold their ground, demanding a higher bid from Cisco. There are enough of those naysayers to torpedo the acquisition at the proposed price. Cisco can either raise the bid enough to get the deal done, even though the precedent of doing so is unappealing, or it can walk away and forget about it.

Extending the current offer seems pointless. It gives the appearance that Cisco isn’t sure what to do, that it got caught off guard by everything that has happened since it announced the proposed acquisition early last month. If that’s true, Cisco has nobody but itself to blame.

Before it made this offer, it should have known whether it had the necessary support among Tandberg shareholders to close the deal. It’s baffling that Cisco staggered down this cul de sac, and it is even more astounding that it can’t find its way out.

Nothing is likely to change in the next week, and letting this stalled deal twist in the wind indefinitely will help neither Cisco nor Tandberg.

Cisco should realize that Tandberg is based in Norway, nor Denmark. Hamlet might have procrastinated in these circumstances, but Cisco should know whether it wishes to buy or not to buy.

Oracle and EC Positions Harden in Wake of Statement of Objections

Now that the European Commission (EC) has issued a formal statement of objections to Oracle’s proposed acquisition of Sun Microsystems for $7.4 billion, misdirected debates will ensue on multiple fronts.

We could argue all day about what ought to happen, what should happen, but it doesn’t matter. What we think is irrelevant to this process and to the ultimate disposition of Oracle’s bid for Sun.

What matters now are two things: the adamancy of the EC’s opposition to Oracle’s Sun acquisition, which turns on competitive concerns about the former’s ownership of MySQL in the database market; and how Oracle responds to that opposition.

Given the unusually prompt and surprisingly vituperative counterattack that an EC official delivered in the wake of Oracle’s disdainful reply to the European regulatory body’s statement of objections, I don’t think we should count on the EC to suddenly back down after seeing the sweet light of reason in Oracle’s argumentation.

So far, we are not seeing the two sides angle toward a compromise or reconciliation. If anything, they’re heading in the other direction, hardening their respective positions and digging in for a protracted battle.

Initially, when Oracle first announced its bid for Sun, we didn’t see much discussion of MySQL as a deal consideration. Some analysts had estimated that MySQL accounted for about $300 million in revenue in its last fiscal year. That might not seem like a huge amount, but remember that MySQL is doing well in database-management markets that are growing fast – those in developing countries such as China, India, Southeast Asia, Eastern Europe, and Latin America.

Bear in mind, too, that Oracle isn’t a major player in those markets. Its flagship database software is too expensive to compete in cost-sensitive markets where many businesses are at earlier stages of development than their counterparts in mature economies. In that context, one can see that Oracle views MySQL as a ticket to growth in a world where growth has become harder to attain. What’s more, MySQL gives Oracle a competitive entry in those high-growth markets against its longtime nemesis Microsoft and that vendor’s Microsoft SQL Server.

Does Oracle want to give up MySQL and leave behind an opportunity to gain share, revenue, and profitability in growth markets where it currently isn’t prospering against its longtime adversary? In a word, no.

Oracle wants MySQL. It doesn’t view the open-source database as incidental to its acquisition of Sun. Instead, Oracle sees MySQL as an essential asset, one it very much wants to own.

Look at it this way: Anything Oracle would cobble together with Sun’s hardware and other software for a data-center convergence battle against IBM, HP, and Cisco would confront prolonged, stiff competition in a war of attrition for consolidation spoils in mature data centers. That’s a war with waging, yes, but it’s one Oracle isn’t certain to win, and Larry Ellison and his team know it.

Meanwhile, MySQL represents an attractive, high-probability hedge against the more speculative data-center initiative. Unlike Sun in the data center, MySQL is on the ascent in the developing world’s database-management markets. It’s number one or two already in some key high-growth jurisdictions, and Oracle – with its ample resources and prodigious sales machine – could drive even greater returns. MySQL’s market opportunity isn’t as big as the one associated with the data-center push, but it’s probability of return is higher. Oracle knows it, too.

So, Oracle won’t let go, and the European Commission is spoiling for a fight. I’m not sure why Oracle went into street-fighting mode, but its truculent stance seems unlikely to persuade the EC to reconsider its position. Increasingly, it seems the EC will only be appeased if Sun consents to divest MySQL before or concurrent with the Sun acquisition.

What’s likely to happen now is that Oracle basically will object to the statement of objections. With no softening or surrender likely in the positions or the EC and Oracle, the current impasse is likely to lead to a formal rejection of the deal by the EC. According to a piece in the Wall Street Journal, here’s how that process would look:

The European Commission is due to make a final ruling on the deal by Jan. 19. Oracle could appeal if the EU ends up blocking the acquisition. In that event, the case would head to trial, and the process could drag on for months or even years, said Bert Foer, president of the American Antitrust Institute, a nonprofit group that isn’t affiliated with the case.

All the while, Sun’s asset value will depreciate. Oracle already says Sun is losing approximately $100 million per month as this acquisition’s approval is delayed.

Would Oracle just pull the plug and walk away, invoking a $260-million breakup fee? The consensus is that Oracle isn’t leaning in that direction. That, in and of itself, tells you how much Oracle wants this deal to go through, and it also tells you that MySQL is a significant element in Oracle’s grand design.

Nortel to Cut 56 Jobs in Texas with Approval of Avaya Deal Pending

In a move evidently connected to Avaya’s pending acquisition of its enterprise business, Nortel announced today that it would slash 56 jobs at its facility in Richardson, Texas, effective on or around Jan. 3, 2010.

The news arrived in a mandatory notification letter submitted to the Texas Workforce Commission, according to American City Business Journals.

Although Avaya’s acquisition of Nortel’s enterprise business is being reviewed by the Canadian government, recent scuttlebutt suggests the deal is likely to be approved.

In other Nortel news, the insolvent telecommunication-equipment vendor plans to delay filing its third-quarter results until as late as Nov. 16 because of changes to the way it reports data for some overseas subsidiaries.