Nortel to sell CRM division for $200 million

By Ann Bednarz
Network World Fusion, 10/02/01

Telecom software vendor Amdocs will buy Nortel's customer relationship management division for $200 million cash, the companies announced Tuesday. The sale comes just 2 years after Nortel paid a high premium for CRM vendor Clarify in a deal worth $2.1 billion in stock when it first was announced in October 1999.

Amdocs sells billing and order management software to a strong roster of telcos, including BellSouth, British Telecom, Nextel and Verizon. The Israeli company will use Nortel's Clarify software to enhance its customer care functionality and differentiate itself in the crowded, slow-growth telco billing market.

Speculation that Nortel would sell its CRM assets to raise cash has been rampant over the last few months, and the Clarify CRM division attracted more than one interested suitor. Siebel, SAP and Oracle reportedly each made or considered making an offer. The 600-or-so strong Clarify customer base and the opportunity to narrow the competitive CRM field were obvious draws for Nortel's CRM brethren.

That none of these suitors panned out is bad news for Clarify users, says Michael Maoz, vice president of Gartner's CRM practice. "Enterprise clients outside of the communications industry who have Clarify installed are potentially in for a rude awakening," he says.

Amdocs focus is - and will remain on - telecom companies, and the Clarify CRM software likely will not evolve from an industry perspective, Maoz says.

Indeed, Amdocs says it will retain its focus on communications. The company will rely on partners to support Clarify's enterprise customers.

"A key component in Amdocs' success has been our disciplined focus on communications. Similarly, in integrating with Clarify, we will be focusing our CRM activities and resources on the communications market," said Avi Naor, president and CEO of Amdocs Management. "At the same time, we will be true to our heritage of customer commitment by managing our enterprise relationships through our partners who have the focus, knowledge and capabilities to support these sectors."

Nortel said it will sell patents, intellectual property and trademarks of its CRM unit to Amdocs, which will assume existing customer contracts and certain leased office space. The CRM sell-off is the latest in a string of deals as Nortel whittles down its product line to core areas such as long-haul optical, metro networking and wireless.

The sale is expected to close in the fourth quarter pending regulatory approval.

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