Timing Doesn’t Favor NSN Bid for Nortel MEN Assets

Now that the $521-million stalking-horse bid from Ciena has been approved and the date has been set for the auction of Nortel’s Metropolitan Ethernet Networks (MEN) assets, attention has turned to which companies might challenge Ciena for the prize.

The auction will take place November 13, and vendors have until November 9 to tender counterbids.

In my view, there still is a strong possibility that Ciena’s bid will go unopposed. Of the likeliest contenders, Ericsson has the means, but probably not the inclination; Alcatel-Lucent’s CEO seems averse to growth by acquisition; Fujitsu is seen as a dark-horse candidate by some; and joint-venture Nokia Siemens Networks (NSN) has become a seemingly bottomless sinkhole for goodwill writedowns by its two owners, Nokia and Siemens AG.

Given the vast impairment charges NSN’s parent companies have incurred, I doubt either parent feels particularly inclined to ante up to the auction table. In all likelihood, NSN’s parent companies will take stock (literally and figuratively), try to staunch the joint venture’s hemorrhaging losses, and then decide whether and how to move forward. Now probably is not the time for NSN to ponder an acquisitive expenditure of more than half-a-billion dollars — perhaps more if Ciena raises the stakes.

Ericsson could get involved, and Alcatel-Lucent might reverse course, but one could make a persuasive and plausible case that Ciena will be the only company with a bid filed by November 9.

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