Still Early Days in SDN Ecosystem

Jason Edelman has provided a helpful overview of the software-defined networking (SDN) ecosystem and the vendors currently active within it. Like any form chart, though, it’s a snapshot in time, and therefore subject to change, as I’m sure Edelman would concede.

Still, what Edelman has delivered is a useful contextual framework to understand where many vendors stand today, where “stealth” vendors might attempt to make their marks shortly, and where and how the overall space might evolve.

Edelman presents the somewhat-known entities — Nicira, Big Switch, NEC, and Embrane (L4-7) at the applications/services layer — and he also addresses  vendors providing controllers, where no one platform has gained an appreciable commercial advantage because the market remains nascent.  He also covers the “switch infrastructure” vendors, which include HP Networking, Netgear, IBM, Pica8, NEC, Arista, Juniper, and others. (In a value-based analysis of the SDN market, “switch infrastructure” is the least interesting layer, but it is essential to have an abundance of interoperable hardware on the market.)

Cards Still to be Played

The real battle, from which it might take considerable time for clears winners to emerge, will occur at the two upper layers, where controller vendors will be looking to win the patronage of purveyors of applications and services. At the moment, the picture is fuzzy. It remains possible that an eventual winner of the inevitable controller-market shakeout has yet to enter the frame.

In that regard, look for established networking players and new entrants to make some noise in the year ahead. Edelman has listed many of them, and I’ve heard that a few more are lurking in the shadows. Names that  are likely to be in the news soon include Plexxi, LineRate Systems (another L4-7 player, it seems), and Ericsson (with its OpenFlow/MPLS effort).

These are, as the saying goes, early days.

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At NSN, Nokia and Siemens Still Grope for Exit

Let’s say two companies are involved in a joint venture that’s been an unhappy marriage. The relationship isn’t as toxic as the former partnership between Mel Gibson and Oksana Grigorieva, but it hasn’t been a day at the beach, either. Neither partner wants to remain in the business alliance; they’re both looking for a dignified exit.

With logic and reason as your guides, what would you expect their next moves to be?

Yes, one partner might approach the other, looking to sell its interest in full. It’s also possible that one company might sell its interest to an approved third party, offering a right of first refusal to its JV partner. It’s also conceivable that both partners would put the joint venture on the block, hiring an agent to discreet present it to private-equity shops and strategic buyers. They might even consider putting some lipstick on the pig and trying an IPO, hoping to benefit from auspicious timing and favorable lighting.

Okay, now throw logic and reason to the wind. What would you do now?

Maybe, as Nokia and Siemens have done at Nokia Siemens Networks (NSN), you’d compound the unhappy union by acquiring a floundering telecommunications-equipment business from a vendor eager to unload it. Misery loves company, after all, so why not plunge headlong into the pit of despair? If you put on your absurdist bifocals, the move just might make sense on a surreal existential level. But we’re talking business, not Dadaism.

Just when I think there’s nothing in this crazy industry that can surprise me, something does just that. I admit, I’ve been puzzling over why NSN would buy Motorola’s networks business, which retains some wireless-operator customers, especially in North America, but also carries hefty baggage in the form of a product portfolio predicated on technologies (a large portion of its 3G gear, and its WiMAX 4G offerings) that have gone out of fashion. NSN will pay $1.2 billion for the Motorola unit, and — other than some modest scale and a minor ostensible market-share gain — I don’t see how it derives much benefit from the transaction.

Squeezed from all angles, from traditional competitors Ericsson and Alcatel-Lucent and from hard-charging Huawei — when it’s not fighting an intellectual-property lawsuit launched by, of all vendors, Motorola — NSN isn’t a thriving business. As I have mentioned previously, its joint-venture partners have taken massive goodwill writedowns since forming the business back in 2007.

Digressing for a moment, I want to note that I am not a proponent of joint ventures. Many European companies seem favorably disposed to them, and I understand the underlying reasoning behind them: pool resources, share and mitigate risk, eliminate distraction to one’s core business. Unfortunately, they’re usually unworkable in practice. It’s hard enough getting people from the same company to agree on strategy and to execute successfully. When you have the political machinations inherent in a joint venture, well, the job becomes nearly impossible.

Getting back on track after that brief digressive detour, NSN is in a tough spot.

How tough became clear to me after I read an article in the Wall Street Journal yesterday. Neither Nokia nor Siemens wants to continue participating in the joint venture, but they can’t find a way out. It’s as if Jean-Paul Sartre has rewritten No Exit and staged it in a boardroom. Hell is having to deal with other people in a joint venture.

Components Shortages Affecting Vendors Worldwide

At the moment, components shortages seem to be pervasive in the technology industry. Vendors large and small, throughout most of the world, have been affected by them to greater or lesser degrees.

The problem appears to be with us for a while. To be best of my knowledge — and I will concede at the outset that my research hasn’t been definitive — vendors everywhere in the world are having difficulty sourcing adequate numbers of many types of components. The only exception is China, where vendors in telecommunications, cleantech, and other fields have not reported that same component-sourcing difficulties that have hobbled their counterparts in Europe, North America, and other parts of Asia.

That doesn’t necessarily mean that Chinese companies aren’t affected by components shortages. All it means is that they haven’t reported them, at least in the English-speaking media I’ve perused. Still, it’s a development that bears watching. In that China does not ascribe to the tenets of unfettered capitalism, it sometimes operates according to a unique set of rules.

Today’s component shortages span various semiconductor types, including but not limited to DSPs, FETs, diodes, and amplifiers. Vendors of solar inverters, particularly those based in Europe, also have been affected.

Meanwhile, Reuters reports that a shortage of basic electrical components could last into the second half of 2011, limiting the ability of telecommunications-equipment manufacturers to respond to improving market demand.

Reuters reports that memory chips and other fundamental components such as resistors and capacitors are in short supply after their makers slashed output, fired staff, put equipment purchases on hold or went out of business during the recession.

The shortages already have been blamed for weaker-than-expected results last quarter at telecommunications-equipement vendors Alcatel-Lucent and Ericsson, which really don’t need the added grief.

Alcatel-Lucent blamed components shortages for a large loss that it posted in its first fiscal quarter. Alcatel-Lucent’s CEO Ben Verwaayen said the said the shortages involved “everyday” low-cost components. He explained that most components come from China, where the manufacturing industry hasn’t been revamped since major cuts that followed the severe global downturn. 

We already know that the supply-chain issues that afflicted Cisco’s channel partners and customers were blamed partly on component shortages.

What’s more, Dell partly blamed shortages and higher costs of components, including memory, for its inability to maintain gross margins during its just-reported quarter.



And AU Optronics, Taiwan’s second-ranked LCD manufacturer and a supplier to Dell and Sony, reported that an LCD panel shortage is likely to last into the second half of this year.

By no means are those the only vendors affected. You only have read the recent 10-Qs or conference-call transcripts of companies involved in computer networking, telecommunications gear, personal computers, smartphones, displays, or cleantech hardware to understand that components shortages are nearly everywhere.

I just wonder — and I make no accusation in doing so — whether Chinese manufacturers are as affected by the shortages as are their competitors in other parts of the world.

What’s Behind Microsoft’s Patent-Licensing Deal with HTC?

Jared Newman of PC World expounds on two possible scenarios behind Microsoft’s agreement to license unspecified patents to handset vendor HTC for use with that company’s Android-based smartphones.

Quoting directly from Newman’s article:

Here are two possible scenarios behind the HTC-Microsoft agreement:

The first is a conservative view. HTC’s phones may infringe on Microsoft patents. Rather than engage in two legal battles at once, HTC quickly agreed to license Microsoft’s patents before Redmond went after it. This spares HTC from another attack in court, while giving Microsoft a sort of insurance plan on HTC’s increasingly popular Android phones along with securing royalties.

The second possibility is more intriguing. Microsoft is throwing HTC a life preserver, letting the phone maker use Microsoft patents as a way to fend off Apple and its iPhone. I see it as an escape plan if HTC’s case against Apple goes south. If the possibility of a court-ordered injunction against HTC Android phones becomes real, HTC could simply say it’s using Microsoft’s patents instead, adjusting the design of its phones accordingly. This assumes that there’s overlap between Apple’s and Microsoft’s smartphone patents, and we don’t know because Microsoft didn’t get into details.

There is a third scenario, though, and it was mentioned in an IDG News Service item that quoted Francisco Jeronimo, an IDC research manager. To wit:

The fact that HTC, Samsung and Sony Ericsson also make Windows phones may make any discussions with Microsoft easier to resolve, according to Francisco Jeronimo, research manager at IDC. He said he wouldn’t be surprised if the vendors can get discounts related to how they are going to push devices based on Windows Phone 7.

Indeed, I think we have a winner.

While HTC can expect no mercy from Apple and its patent lawyers regarding alleged infringements occasioned by the former’s Google Android handsets, Microsoft is a different beast entirely. As I’ve said before, Google stands to make its mobile-platform gains at Microsoft’s expense, not at Apple’s. That’s because Google and Microsoft both count on patronage from handset vendors that license their mobile operating systems. Apple, as a vertically integrated player (providing operating system, handset, and online applications and content) doesn’t need handset vendors. It is its own handset vendor.

Consequently, Microsoft and Google are direct mobile competitors in a way that neither competes against Apple. In the battle between Microsoft and Google for the affections of handset vendors, it’s a zero-sum game. If a handset vendor, such as Motorola, defects from Microsoft to the Google camp, that’s lost business for Microsoft, and a lost service conduit to consumers.

What’s Microsoft to do? Some of the handset vendors — HTC, Samsung, Sony Ericsson — are hedging their bets, with feet in both camps. Microsoft wants to keep their business. To do so, it will be inclined to use every instrument and mechanism at its disposal, carrots and sticks. The threat of patent-infringement lawsuits might be a compelling stick to wield, just as sweet deals on patent licensing, with certain strings attached, might represent a tasty carrot.

It isn’t difficult to envision a Microsoft negotiating team making the following pitch to HTC: “You’re infringing on our patents with those Android-based handsets, and we intend to rectify the situation. Rather than pursue litigation that nobody wants, we’re willing to give you a great licensing deal . . . on the condition that you continue to develop and effectively market Microsoft-based handsets. What do you think?”

That’s the basic outline, anyway. The specifics of the deal might look a little different, but the essential idea is that Microsoft uses patents and litigation as bargaining chips to keep handset vendors in the Windows Phone 7 Series stable.

IBM-Johnson Controls Partnership Signals New Automation Wave

As Internet protocol proliferates, pervading every device that can possibly be networked, automated solutions are reaching into new realms and exploring untapped possibilities.

They’re also providing a dynamic foundation for new technology partnerships. One such partnership, which includes a smart-grid aspect, involves IBM and Johnson Controls.

The two companies are combining forces to improve the energy efficiency of office buildings and other commercial and industrial facilities. They’ll achieve that result by integrating IBM’s business-analytics software and middleware with Johnson’s building control technology. The objective is to deliver an automated system that will automatically turn off lights in unoccupied rooms or buildings, identify areas of heat loss, and shut off and turn on HVAC systems as required.

IBM and Johnson Controls worked together previously to deliver energy-efficiency solutions for the data center. As a result of those customer engagements and others, they realized more was possible.

Clay Nesler, Johnson Controls’ VP for Global Energy and Sustainability, explained how the partnership evolved:

“These capabilities have been available for a long time, but they haven’t been widely applied . . . . Both organizations are committed to open standards and Web technologies. So while this would have required a lot of engineering and R&D work several years ago, we now hope to leverage as many standards as possible,”

That’s the key: Standards are facilitating the development and delivery of automated-management solutions, including many of those applicable to the smart gird, that were too cumbersome, too unwieldy, too ocustomized (and therefore too expensive) in the past.

This is why the networked machine-to-machine (M2M) market is seen to offer so much promise, not just for IBM and Johnson Controls, but for every major information-vendor that has its eyes open and its skin in the game. Think of Intel, which can provide chips for the embedded devices; Cisco and its network infrastructure; Oracle with its analytics applications and databases; Dell with its servers; Ericsson with its wireless-networking technologies. Also consider the new business possibilities for wireless operators worldwide.

It’s a huge opportunity, and the smart grid, broadly defined, is a big piece of it. Technology vendors have a correspondingly large stake in ensuring that it is done right. Expect them to become active and involved partners with utilities, regulators, and governments.

Nortel Ponders Fate of LTE Patents

Not much remains of the once-proud Nortel Networks, but it retains a portfolio of 4,000 LTE and other wireless patents that have market value of as much as $1 billion, according to analyst estimates.

For a time, Nortel considered keeping the patents. Some within the disintegrating, insolvent company envisioned that it could be recast as a patent troll, staffed with more lawyers than engineers, punitively pursuing companies perceived to have encroached on its intellectual-property rights.

It still might choose that option, but other possibilities loom.

According to report in the Globe and Mail, Nortel is “exploring strategic alternatives to maximize the value” of the patents. The company has yet to decide how it will dispose of the patents, but alternatives apparently include an auction of the patents, a joint venture with a new partner, or long-term licensing agreements with wireless companies. That last option is a euphemism for becoming a patent troll.

What remains of the Nortel braintrust might be disinclined to auction the patents, but the Globe and Mail says the company faces mounting pressure from anxious creditors, suppliers, and pensioners who want all the assets divested.

While Nokia Corp. and Telefon AB LM Ericsson are said to have privately expressed interest in acquiring the patents, RIM bears watching in this context. Nortel’s LTE patents were and are of great interest to the BlackBerry purveyor.

Unlike the other potential acquirers, RIM can play the Canadian card to put pressure on the country’s federal government, arguing that such forward-looking intellectual property should remain in Canadian hands.

Just when we thought all the juice had been squeezed from the Nortel lemon, there might be one last lemonade sale.

Dell’Oro Forecasts Growth in Chinese Wireless-Infrastructure Spending in 2010

Primarily as a result of a decrease in 3G deployments in China, the worldwide market for wireless-network infrastructure declined 10 percent in the third quarter on a year-over-year basis, according to market researcher Dell’Oro.

Said Dell’Oro in a statement quoted by Reuters:

“While 3G spending in China is expected to stay depressed for the remainder of this year … heavy spending by China Unicom and China Telecom is expected to resume in 2010, and will be a prime contributor to both the WCDMA and CDMA markets.”

In this year’s third quarter, the market was worth $9 billion in revenue. As reported by FierceWireless, Ericsson’s share of the market remained steady, but Huawei gained share on Nokia Siemens Networks. Recently, Alcatel-Lucent won contracts worth approximately $1.7 billion to provide network upgrades, infrastructure, and services for China Mobile and China Telecom.

As in many other industries, telecommunications-equipment vendors seeking revenue growth will have to go to China to find it.

Nokia Siemens Networks to Focus on Market-Share Gains and Reduced Costs

Even though it struck out twice in auction-ring swings for pieces of insolvent Nortel Networks, joint-venture Nokia Siemens Networks (NSN) apparently has devised another plan to improve its fortunes as a vendor of telecommunications-networking gear.

For the past two years, NSN has focused primarily on profitability at the expense of market share. Now, under new CEO Rajeev Suri, the company will switch gears, prioritizing market share ahead of all else. Reuters reports that Suri told Finnish daily Helsingin Sanomat the following:

“In early 2008 we made a strategic decision to focus more on cash flow and profitability than on the market share. Now it’s time to give it up and to focus on the market share.”

What NSN was doing wasn’t working, so a change of strategy doesn’t seem misplaced. Losing competitive ground to Huawei, ZTE, and Ericsson in the wireless-equipment market, NSN had reached a point where different, if not entirely desperate, measures were required.

To gain market share, however, NSN will have to become a different company. Its CEO concedes that the joint venture must position itself as a “cost leader” if it is achieve market-share gains without losing money. The company also agrees that it must become more aggressive with its pricing strategies and marketing.

As with its computer-networking brethren, such as Cisco and HP (now including 3Com), NSN will be turning to lower-cost geographic jurisdictions whenever possible to reduce its operating costs connected to the design, development, and manufacture of its products. One example is the company’s recent decision to produce 3G equipment at its Oragadam facility near Chennai, India, by May 2010.

NSN also apparently is following the Cisco model of seeking “market adjacencies,” though I’m not sure the German-Finnish joint venture would use the same terminology. NSN said Monday that its telecommunications expertise gives it a mandate to offers solutions to partners and customers involved with renewable energy, intelligent power grids, and smart metering.

Said Juhani Hintikka, head of operations and business software at NSN:

“When you look at what is required to manage power grids, or to make full use of unpredictable renewable energy sources such as solar and wind, as well as bring greater transparency to and flexibility to billing, the synergies with the core of our existing telecoms business are obvious.”

As of January 2010, NSN will be restructured from five business units into three: Business Solutions, Network Systems, and Global Services. Efforts related to renewable energy and energy efficiency will be folded into Business Solutions.

The company, in the midst of shedding as many as 5,800 jobs by 2011 — presumably to become leaner and meaner in its quest for increased market share — says its primary business focus remains the telecommunications industry. Like Cisco and others, however, it is looking to enter related growth markets with its products, services, and technologies.

Ciena Gets Nortel’s MEN; NSN Faces Uncertainty

Now that Ciena has claimed Nortel’s Metropolitan Ethernet Networks (MEN) business assets, which include optical- and Ethernet-networking products and technologies, questions linger about what exactly transpired and what happens next.

Ciena’s winning bid was worth $769 million, about $248 more than the stalking-horse bid it submitted in October. Comprising $530 million in cash and $239 million in senior convertible notes due in June 2017, Ciena’s bid topped an indeterminate offer put forward by ambivalent Nokia Siemens Networks (NSN), which did its best afterward to rationalize why it didn’t come away with the auction prize.

The big winners in this auction are Nortel employees. About 85 percent (2,000) of Nortel’s MEN personnel will join Ciena, presuming the deal clears regulatory hurdles. The transaction must receive court approval in the United States and Canada, which it expects to get at a joint hearing December 2, as well as in France and Israel.

Based in Linthicum, Md., Ciena practically doubles in personnel as a result of the acquisition. It also gains about 1,000 new customers spread across 65 countries. Included among those new customers are carriers AT&T Inc., Verizon Communications Inc. and Comcast Corp.

Ciena says the deal will be “significantly accretive” to its operations in fiscal 2011. As noted by the Wall Street Journal, Nortel was a leader in developing 40 gigabit optical-networking equipment, allowing carriers to quadruple their network capacity without incurring much additional cost. It is also among the industry leaders developing the next-generation 100-gigabit optical-networking technology.

But the past tense of the preceding paragraph is notable. Like the rest of insolvent Nortel, the MEN business has struggled under the purgatory of bankruptcy protection. For the first nine months of this year, Nortel’s MEN business reported revenue of $988 million, down 21% from a year earlier. Results have been gradually worsening. In the latest quarter, Nortel’s MEN revenue fell 26 percent to $295 million in relation to the corresponding quarter last year.

While the market for carrier-Ethernet gear continues to grow, even during a downturn that has inhibited expansion in most carrier-related market segments, competition is fierce. Infonetics expects the market for carrier-Ethernet equipment to reach $34 billion by 2013, growing from $17 billion in 2008. Nonetheless, competitors including Huawei, Alcatel-Lucent, Ericsson (Redback), ZTE, and Extreme Networks. The added scale that Nortel brings to Ciena will help, but it doesn’t guarantee success.

Besides, as many analysts have noted, Ciena and its executive team have no experience integrating an acquisition of this size. Any student of technology acquisitions will tell you that more is likely to go wrong than to go right, especially when the team managing the integration hasn’t had the benefit of previous experience in similar circumstances.

Still, there’s no question that Ciena’s leadership is confident of being on the right track and will do its best to leverage what Nortel’s MEN assets offer. The same cannot be said for Nokia Siemens Networks (NSN), the Swedish-German joint venture that finds itself back in limbo after this auction. Having already fallen short of the mark in a bid for Nortel’s wireless assets, ultimately captured by Ericsson, NSN now has been a two-time loser in the Nortel auctions.

Bidding this time in conjunction with private-equity firm One Equity Partners, Nokia Siemens Networks (NSN) was at pains to justify its failure to overtake Ciena in the MEN auction ring. In a terse statement posted on its website, NSN said the following:

Nokia Siemens Networks confirms that, with its financial partner, it did not submit the highest bid for Nortel’s optical networking and carrier Ethernet assets in the bankruptcy court-sanctioned auction that began on Friday morning and extended through the weekend. Nokia Siemens Networks believes that its final offer represented fair value for the assets, and further bidding could not be financially justified.

It’s possible that the auction bid for Nortel’s MEN assets was something of a Hail Mary pass for the joint-venture partners. Now that it has fallen incomplete, Nokia and Siemens are likely to reconsider their commitments to the venture. Many think Siemens will want out of the arrangement. Meanwhile, Nokia might not have the fortitude or resolve to buy out its partner’s stake in the company. There’s a reasonable possibility that the joint venture might seek another partner or put itself for up for sale completely.

As for Nortel’s creditors, they must be pleased. At the end of the auction, they received a winning bid that was nearly a quarter-billion dollars more than the initial stalking-horse offer from Ciena. It wasn’t quite the $1.13-billion payday they derived from the sale of Nortel’s wireless assets to Ericssson, nor the more than $900 million they got from Avaya for Nortel’s enterprise business, but it wasn’t bad.

Gradually running out of assets to sell, Nortel is expected to make an announcement about the sale of its Global System for Mobile Communications (GSM) business later this week.

NSN Gets Private-Equity Help for Counteroffer to Ciena’s Bid for Nortel MEN Assets

For a long time, it appeared Ciena might go unopposed in its quest to gain ownership of insolvent Nortel Networks’ Metropolitan Ethernet Networks (MEN) assets.

Adhering to the rules of the Nortel auction process, Ciena set the pace with a stalking-horse bid of $390 million in cash and 10 million in shares. Although the share component of the bid has varied in value, the Ciena proposal would have been worth $526 million at the close of trading yesterday.

From the outset, however, Nortel’s creditors weren’t entirely satisfied with a bid that wasn’t an all-cash offer. In previous auctions of Nortel business assets, involving its wireless and enterprise businesses, the former telecommunications colossus had accepted all-cash winning bids from Ericsson and Avaya, respectively.

The size of the Ciena bid, and the fact it contained a non-cash element, suggested that the competition for Nortel’s MEN assets wouldn’t be as intensive or extensive as were the auction battles for Nortel’s wireless and enterprise businesses.

In fact, Nortel had to pull out all the stops to get another bidder to contest the Ciena offer. On November 13, Nortel extended the deadline for bidding until November 17. The company seemed to be giving a second prospective bidder more time to cobble together an offer. Earlier, on November 3, two people familiar with the process said Nokia Siemens Networks (NSN) was considering a bid, according to Bloomberg.

Well, at long last, the beleaguered and conflicted NSN apparently has moved toward the auction ring. It needed assistance to do so, however, which tells you all you need to know about why the bid took so long to come together — and why Nortel had to extend the original deadline.

NSN apparently is making its bid in conjunction with private-equity firm One Equity Partners LLC, which manages $8 billion in investments for JPMorgan Chase & Co.

If you peruse One Equity’s investment portfolio, you’ll notice that it doesn’t exactly specialize in the telecommunications-equipment space. It has money, though, and that clearly was a draw for NSN, which is going through a dark night of the corporate soul as well as a difficult restructuring. At one point, one or both of its joint venture partners were said to be contemplating abandonment of the enterprise, with Siemens AG particularly uncertain about its commitment to the business.

Now, though, it appears NSN will make a bid. We know neither how high that bid will be nor how high Ciena will be willing to go to claim Nortel’s MEN assets. Many analysts who follow Ciena, as well as certain large investors in the company, would prefer not to see it escalate its offer much beyond the level set by the stalking-horse bid.

Something to keep in mind is that Nortel’s MEN business isn’t exactly firing on all cylinders. After some delay, Nortel reported its third-quarter financial results earlier this week; and, as one might expect from an insolvent company going through bankruptcy-related dissolution, Nortel is not doing well. Of the continuing operations that it fully owned, the MEN business saw the biggest year-over-year quarterly revenue decline. For the third quarter of fiscal year 2009, Nortel’s MEN business generated $295 million in revenue, down 26 percent from revenue of $398 million in the third quarter of 2008.

That’s not to say that somebody couldn’t acquire it, rehabilitate it, and get it back on track. It might be a fixer-upper property worth considering. It’s still a challenge, though, and neither Ciena nor NSN can afford to overpay extravagantly. If the bidding rises above $800 million, the ostensible winner of this auction eventually might be seen as the loser.

Regardless of the outcome, the auction will kick off tomorrow.

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.

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.