As was anticipated in a number of reports, Nortel announced further restructuring and job cuts yesterday.
An article in the weekend Globe and Mail questioned the wisdom of pre-announcing the intent to sell one its top performing divisions, the Metro Ethernet Networks group. Yesterday’s results confirmed that 3rd quarter sales have slipped and at least some of that has to be attributed to customer uncertainty about where the division is heading.
Earlier this fall, some had speculated that Huawei is among the most likely suitors.
A challenge for Huawei in operating in North America is the need to establish a domestic supply chain. Huawei is able to send products produced in China into Canada or the United States. However, US export controls puts some restrictions on shipping high tech items back to China.
This adds a bit of a wrinkle into normal vendor “return and repair” of equipment that needs maintenance. How will Huawei work through the challenges as it ramps up its operations in Canada?
What impact might this have on Huawei’s ability to acquire parts of Nortel? To what extent do parts of Nortel provide Huawei with a strategic solution, helping to accelerate its western growth.
Who else might come to the auction for Nortel’s best assets?