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Nortel enterprise business set to go to Avaya for $500 million?

According to the Canadian newspaper The Globe and Mail, Nortel is close to selling its enterprise unit for $500 million. The paper says Avaya is the leading bidder, but Siemens-Enterasys could emerge as the buyer if Avaya backs out. Both bidders are interested in Nortel’s enterprise customers more than its technology.

If Avaya seals the deal, it will suddenly find itself in the data networking market with Nortel’s line of enterprise routers and switches. It’s unclear whether it would hold onto those assets or try to spin them off to a third party. Depending on who you talk to, Nortel owns about 3% to 4% of the network switching market. If Siemens-Enterasys emerges as the winner, it will have find itself with some redundant product lines which will require some rationalization.

It looks like Nortel will purge some of its lower level executives before handing over the division to a buyer. www.ITbusiness.ca is reporting that Nortel laid off the senior UK staff who were leading Nortel’s unified communications partnership with Microsoft, known as the Innovative Communications Alliance. The partnership was formed in 2006 and expires next year. It’s been on shaky ground since Nortel entered bankruptcy.

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