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Nortel for sale … maybe

Nortel is mulling over bids worth nearly $1 billion for its Metro Ethernet Networks (MEN) unit.

Nortel placed the MEN unit — one of the healthiest divisions in the company — on the block in September to slash costs and earn some cash, but now the company is taking its time deciding on a bidder, The Globe and Mail of Canada reported this week.

That’s likely because business has been deteriorating for the Canadian networking giant steadily since September, and now the company is weighing other possibilities, including selling its carrier business or even the company as a whole. Nortel channel partners have demanded the company trim its product line, and many have called for slashing the carrier business.

According to reports, China’s Huawei Technologies has shown interest in acquiring Nortel, but that deal would face strong resistance for security purposes from both the Canadian and U.S. governments, which both have networking contracts with Nortel. The U.S. blocked Huawei’s bid to acquire 3Com Corp. last spring after reports that the company was directly linked to the Chinese government.

Analysts fear that if Nortel doesn’t move fast on one of the MEN bids, the unit will lose value. Yet, while Nortel is facing serious financial woes, it has a steep install base in critical parts of the networking market that make the company ever-attractive for acquisition. Nortel still owns a sizeable share of the carrier market and ranks third in enterprise telephony, according to research by Infonetics. That means companies like Cisco Systems can’t afford to look away if for nothing other than account control. Other companies rumored to be interested in pieces of Nortel are Nokia Siemens and Ericsson for the wireless division.

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