Nortel Networks got the word out yesterday that it is preparing to exit the LTE infrastructure business, a move that will likely leave the veteran wireless infrastructure company without a 4G play. The company, struggling with lengthy and well-documented financial problems, said it is taking immediate and decisive actions to improve its business. One of its strategies is to "mitigate the risks associated with its 4th generation carrier wireless investments."
In a conference call with investors, Nortel's CEO, Mike Zafirovski, said the company had not settled on a plan for the LTE business, but he described its options as similar to the approaches Nortel used when it off-loaded its UMTS and WiMAX products. The company sold its UMTS infrastructure business to Alcatel in 2006. It shifted away from WiMAX this past summer when it teamed up with Alvarion to develop an end-to-end mobile WiMAX solution that the two companies now offer as partners. Nortel justified the WiMAX move, in part, with a decision to put increased emphasis on LTE, which it considered a better near-term opportunity. For a company that claimed substantial and meaningful intellectual property in both WiMAX and LTE, these strategic changes must be difficult indeed.
Zafirovski also said the company's CDMA business, which has been declining, has not improved and is under "additional pressure." He said the company is undergoing a comprehensive review to determine what types of restructuring and cost reduction initiatives can be used to improve the company's competitiveness. As recently as early August, the company articulated higher hopes for a stronger end to 2008, but Zafirovski said this week that new financial pressures, particularly the double-whammy of market competitiveness and the global downturn, will make the next few months weaker than expected. The company announced that it will be divesting itself of its Metro Ethernet Networks division. The company's future markets will now, apparently, center around enterprise technologies and carrier VoIP.
For more:
- see Unstrung
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