Ciena Gets OK for Bid for Nortel Optical Network Business

The dismantling of Nortel Networks is continuing, with Ciena being the latest rival to make a bid to buy a part of the bankrupt company.

Ciena on Oct. 15 won court approval of its $532 million “stalking horse” bid for Nortel’s Optical Networking and Carrier Ethernet business. The bid, originally put in Oct. 7 by Ciena, sets the floor price in an upcoming auction for the Nortel business, which is expected sometime in November.

The move is the latest in a series by Nortel to sell off parts of its business. Nortel officials declared bankruptcy earlier this year, blaming the global recession for derailing its turnaround plans. Soon after, they decided to sell off businesses rather than try to reorganize under Chapter 11 protection.

Avaya in September paid $900 million for Nortel’s enterprise business, which analysts said put Avaya at the top of the competitive enterprise telephony market.

In addition, Nokia Siemens Network is buying Nortel's CDMA (Code Division Multiple Access) wireless business and LTE (Long Term Evolution) technology for $650 million. Nortel also has agreed to sell its wireless technology business to Telefon AB L.M. Ericsson for $1.13 billion.

On Sept. 30, Nortel announced plans to put its GSM/GSM-R wireless business on the auction block.

Ciena is bidding for such technology as Nortel’s long-haul optical transport products, metro optical Ethernet switching and transport offerings, Ethernet switches, and network management software. It includes Nortel’s OME 6500, OM 5000 and CPL platforms, and its 40G/100G technology.

Ciena currently has about 2,000 workers throughout the country, and officials said that if the deal goes through, they will hire about another 2,000 Nortel employees.

Nortel’s assets would enable Ciena to quickly ramp its switching and transport business, and give it greater traction in the burgeoning automated optical Ethernet-based networking market.

Ciena officials said the business in question generated about $1.36 billion in revenue for Nortel in 2008, and about $556 million in the first six months of this year.

“This is a unique and exciting opportunity for us to accelerate our existing strategy and the pace of our growth plans by two to three years,” Ciena CEO Gary Smith said in a statement after the company made its initial bid.