Nortel looking to break apart

* Nortel shopping business units, Wall Street Journal reports

Executives at industry giant Nortel are shopping pieces of the company to rival vendors, according to a report last night from The Wall Street Journal's online edition.

Nortel continues to try to work its way out of Chapter 11 bankruptcy protection, which it entered in mid-January. Lots of pieces are in motion. There are more layoffs planned. Nortel has negotiated the sale of its Alteon application-delivery gear to Radware, for a stunningly low sum, compared to the value put on the Alteon purchase in 2000. And Nortel has reconsidered whether it should sell its Metro Ethernet Networks business.

Now, however, the Journal cites unnamed sources who say Nortel has seen a lot of interest in two of its businesses:

"Nortel has been able to attract interest in the sale of its core wireless-equipment business and a separate unit that builds telecom systems for offices, according to people familiar with the matter. These businesses posted $6.7 billion in sales last year."

Avaya and Siemens Enterprise Communications are two of the potential buyers, according to the report.

If such deals go through, it will be interesting to see what kind of Nortel emerges from bankruptcy, and what it will offer customers and investors.

On a side note, Nortel yesterday found itself in the embarrassing position of trying to negotiate a more reasonable rate at a block of hotel rooms for the upcoming CTIA Wireless trade show in Las Vegas. Seems that the $2,300-per-night room was a bit too rich for the beleaguered company, even though Nortel booked the room only a few months ago, at a time when it was already in danger of having its stock delisted. Nortel also cut back dramatically on the number of rooms it needs.

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