Motorola, Nortel in wireless infrastructure talks...

Source: IDG

Nortel Networks on Monday declined to comment on a news report that the company is negotiating with Motorola to combine wireless infrastructure units.

"Nortel doesn't comment on rumors and speculation," a Nortel spokesman said.

The two companies are talking as a way to cut costs in a network equipment market that is consolidating and facing stiff competition, The Wall Street Journal reported Monday.

The deal with Nortel would be separate from Motorola's announcement last month that it was considering spinning off its mobile handset business, the Journal reported. Motorola on Jan. 31 announced it was looking at separating the lagging handset division from the rest of its business.

A Motorola spokeswoman wasn't immediately available for comment Monday.

A combined wireless infrastructure unit would have sales around US$10 billion, the Journal reported. Talks between Motorola and Nortel have been going on for about a month, the news report said, and under one scenario, Nortel would own a majority of the joint venture.

Both companies have faced challenges recently. Motorola last month reported a loss of $49 million for 2007, due largely to declining handset sales.

But fourth-quarter 2007 sales were up in the Home and Networks Mobility group, which makes set-top boxes and wireless infrastructure. The group saw sales rise 11 percent to $2.7 billion from the fourth quarter of 2006.

Last year, the U.S. Securities and Exchange Commission charged seven former Nortel executives with participating in a 2003 accounting fraud by manipulating reserves to manage Nortel's earnings.

Last February, Nortel announced it would lay off 2,900 employees and move another 1,000 jobs to low-cost locations throughout 2007 and 2008.

Is Cisco worth the premium?

Source: Cisconet

Nortel loves to shout from the roof tops whenever it sees arch rival Cisco falter, and this week Tony Rybczynski, director of strategic enterprise technologies at Nortel, writing in his Hyperconnected Enterprise blog is citing a recent Gartner Dataquest report that found that Cisco's share by ports of the Ethernet switching market fell to 37%.

He mulls that the results mean that two-thirds of enterprises are saving money or finding better performance elsewhere, and that given Cisco's share by revenue is 73%, "customers are paying way too much to Cisco."

He adds:

Cisco is not going to lower their prices any time soon since they could lose 15% of their revenue base if their revenue share tracked their port share! In fact, as a mature technology, one would expect Ethernet prices to come down over the years …. my friends at Gartner tell me this is generally true but NOT for Cisco.


He concludes that: "If Cisco is only a 400 pound guerilla, then don’t feed him as if he were a 700 pound one!"

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