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Ciena will pay $769M for Nortel's metro Ethernet business

Nokia Siemens Networks has lost yet another auction for some of Nortel's assets

By Mikael Ricknäs, IDG News Service
November 23, 2009 08:11 AM ET

IDG News Service - Ciena will pay $769 million for the optical networking and carrier Ethernet assets of Nortel Networks' Metro Ethernet Networks business, the two companies said on Monday.

Ciena emerged victorious from an auction that took place over the weekend, beating Nokia Siemens Networks. In the end Ciena had to pay about $248 million more for the Nortel business unit than its initial bid, made public on Oct. 7.

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The approval of the deal is set to be heard by bankruptcy courts in the U.S. and Canada on Dec. 2, Nortel and Ciena said.

Nokia Siemens is now a two-time loser in the bidding for Nortel's assets. It previously lost out to Ericsson, which bid $1.13 billion for Nortel's CDMA (Code Division Multiple Access) and LTE (Long-Term Evolution) cellular network assets.

The market for carrier Ethernet equipment is growing, and has been defying the economic downturn, market researcher Infonetics said in a research note earlier this year.

Infonetics expects carrier Ethernet equipment r to grow to $34 billion by 2013, compared to $17 billion in 2008. That's a big cake, but many companies want a piece of it. Ciena will have to compete with the likes of Alcatel-Lucent, Cisco Systems, Ericsson-Redback, Extreme Networks and Huawei, according to Infonetics.

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As a part of its bankruptcy proceedings, Nortel has been selling off the company bit by bit. Besides the Ericsson deal, Nortel sold its Enterprise business to Avaya for $900 million and sold software for wireless networks to Hitachi for US$10 million.

There are some parts remaining to be sold: Nortel plans to say more about the sale of its GSM (Global System for Mobile Communications) business this week.

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