Weeks after filing for bankruptcy, North America’s largest telecom equipment vendor this week announced that it plans to sell parts of its application delivery portfolio to an integrated application solutions provider.
Officials at Toronto’s Nortel Networks Corp. say that – pending a court-supervised auction – Radware Ltd. will acquire their layer 4-7 application delivery business. The products originally were acquired by Nortel (News - Alert) in 2000 by way of its purchase of Alteon.
Joel Hackney, president of enterprise solutions at Nortel, said his company began talking to Radware (News - Alert) late last year, as reports emerged that the company likely would have to cut thousands of jobs.
“Moving forward, Radware and Nortel will work together to ensure the transition is seamless to our customers,” Hackney said. “We remain focused on our enterprise business to deliver our industry-leading networking infrastructure that comprises our end-to-end unified communications solutions, including real time and wireless networking capabilities, services, security and integrated applications.”
As TMC Group Managing Editor Erik Linask (News - Alert) reported, the economic recession and a trend toward software-based communications led Nortel to file for Chapter 11 on Jan. 14.
The company also saw increased competition from rivals such Alcatel-Lucent, with its new leadership, and Huawei Technologies, which is increasingly looking to expand its global presence, according to Linask.
“Furthermore, despite the continued growth of the telecom industry, the innovation spurred by new technologies has also created more of a focus on software-based communications services, which has the Software as a Service space booming,” Linask said. “It is a natural progression as businesses increasingly look to cut costs and reduce infrastructure costs, unfortunately for those vendors that rely on equipment sales.”
Under the deal with Radware, Nortel’s application delivery products will be offered under a merged brand, “Radware Alteon.”
Radware reportedly will offer Nortel customers a 5-year support product plan.
One analyst cited by Nortel is hailing the deal as a win-win. Said Lucinda Borovick, research vice president of Datacenter Networks, IDC (News - Alert): “It will provide a stable path forward for existing Nortel application delivery customers with an established industry provider that specializes in this space and will continue to invest in the advancement of the product line.”
Products that Radware is acquiring include: the Nortel Application Accelerators 510 and 610; Nortel Application Switches 3408E, 2424E, 2424 SSL E, 2216E, 2208E; and the Virtual Services Switch 5000.
Officials from Radware, an Israel-based company whose U.S. offices are in Mahwah, New Jersey, say they view the deal as a strategic move.
According to Roy Zisapel, the company’s chief executive officer, Radware’s ultimate goal is to provide a stronger, integrated product backed by world-class support and a globally focused organization.
“We are committed to making this transaction seamless for existing Nortel customers and intend to take the necessary steps to ensure zero disruption to their business when the transfer occurs,” Zisapel said.
Meanwhile, industry insiders wonder whether the Radware announcement signals the start of a mass Nortel sell-off.
“It was not unexpected that Nortel would shed some assets as it strives to restructure itself while under bankruptcy protection,” TMC’s Greg Galitzine (News - Alert) writes. “Radware, based in Israel, was earlier rumored to be interested in Nortel's Metro Ethernet products. We’ll see if this portends a bigger breakup of the once high-flying telecom gear maker.”
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Michael Dinan is a contributing editor for TMCnet, covering news in the IP communications, call center and customer relationship management industries. To read more of Michael's articles, please visit his columnist page.
Edited by Michael Dinan