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Less than two weeks after posting a net loss of $2.14 billion, or $4.28 per share, for the three-month period that ended Dec. 31, North America’s largest telecom equipment vendor is seeking to break itself up by selling off major divisions, the Toronto-based newspaper The Globe and Mail reports.

 

According to a story by Matt Hartley, Jacquie McNish and Boyd Erman, Nortel Networks Corp. is taking offers from parties interested in their wireless-gear business “as well as a separate division that manufactures office telecom equipment.”

 

“Together, those two divisions posted $6.7-billion in revenue last year, or more than half the company’s sales,” the paper reports.

  

Nortel (News - Alert) spokesman Mohammed Nakhooda declined to comment when reached by TMCnet.

 

As TMCnet reported, Nortel recently announced that it would lay off about 3,200 workers, as the Toronto-based company – once a stock market darling – plunges deeper into financial problems amid a recession and a trend toward software-based communications.

 

 

 

 

As TMCnet reported recently, the company started selling off parts of its application delivery portfolio. That move raised concerns about Nortel because it followed a bankruptcy filing from the company.

 

When reached by TMCnet, a Nortel spokesman said the layoffs would happen within a few months, but could not be more specific.

  

Industry analysts say not only this slower economy, but also a trend toward software-based communications led Nortel to file for bankruptcy on Jan. 14.

 

As TMC Group Managing Editor Erik Linask (News - Alert) reported, Nortel 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.”

 

Nortel officials – whose employees, by contrast, have developed virtual world products that are widely hailed as innovative and forward-thinking – would later concede that they’d been talking to companies since late last year about selling off assets.

 

As TMCnet reported, pending a court-supervised auction, Radware Ltd. stands to acquire Nortel’s layer 4-7 application delivery business. The products originally were acquired by Nortel in 2000 by way of its purchase of Alteon.

  

The Radware (News - Alert) move is prompting some insiders to wonder whether the Radware announcement signaled 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 (News - Alert) Greg Galitzine 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.”

 

The Globe and Mail is reporting that although executives at Nortel had hoped to use bankruptcy protection to negotiate fresh financing and rebuild, the ongoing global financial crisis “has effectively dashed hopes of keeping the company in tact.”

 

“Debtor-in-possession financing – the lifeblood of most bankruptcy restructurings – has all but disappeared this year,” the newspaper reports.

 

Stay tuned to TMCnet for developments.