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Letter to Nortel users: It’s a wrap, and no promises on what's next

Nortel put to rest rumors that it would maintain any of its units under the company name in a letter sent to Nortel users this morning obtained by Nortel also said it had little information to share with customers about what would happen to their service contracts once the company’s units are sold off.

News broke over the weekend that Nortel would sell its LTE and CDMA businesses to Nokia Siemens Networks. Since then rumors have floated about whether the company would maintain its enterprise unit. Then a letter arrived in users’ email boxes this morning.

“Nortel announced that it is advancing in its discussions with external parties to sell its other businesses. We believe that the best outcome for each of our businesses is to find buyers who can carry Nortel’s rich innovation platforms into the future,” stated the letter, which was not signed. The letter went on to say that the company would “assess other restructuring alternatives” for the remaining businesses if they were not acquired.

Nortel has promised since it filed bankruptcy in January that it would emerge from restructuring a leaner, meaner machine. But Nortel CEO Mike Zafirovski attended the International Nortel Networks Users Association (INNUA) annual meeting a couple of weeks ago and outlined a number of potential strategies for the companies, including a total sell-off as one.

“This is a tangible example of them moving forward with that strategy,” said INNUA exectuve director Victor Bohnert, explaining that users weren’t shocked when they received the letter.

But others users contacted have said they won’t be satisfied until they know which company is going to buy Nortel and what will happen to their service contracts. The letter was clearly an attempt to ease anxiety among these users, but it fell short of providing any details.

“We know the most important question to you right now is what all of this means to you and your relationship with Enterprise Solutions. We want to reassure you that during the process we are open for business and will continue to operate. At this time, we do not have all the answers, but we remain committed to ensuring that you experience no disruption to your business during this process,” the letter read.

“As soon as a clear path forward is defined for Enterprise Solutions, we will communicate that news to you,” the letter stated, adding that in the meantime, all product commitments would remain in tact and contracts would be serviced.

Analysts agree that even if Nortel has a buyer for the enterprise unit in the works, there isn’t much more information the company can possibly share until a deal is finalized.

“Once somebody else buys [Nortel], it’s up to them what they do with honoring those contracts,” said IDC analyst Abner Germanow, adding, however, that ongoing service contracts are a profitable business and it would be unlikely for any company not to maintain and honor them.

In the meantime, the letter was an attempt to let customers know that Nortel would keep communications open through the transition.

“Consider this a kiss thrown in your [the end user’s] direction,” said Tom Nolle, president of CIMI Corp., a consultant and analyst firm.

Now users have to hope that the acquiring company is one that will use Nortel’s portfolio to compliment its own offerings, said Bohnert. There has been some fear of an acquiring company that would snatch up Nortel for its customer base with no plans of continuing the enterprise portfolio.

Beyond that customers want an acquiring company that can deal with a major transition and “where service and support is part of the culture,” Germanow said.

Siemens and Avaya are both rumored to be considering acquisition of Nortel’s enterprise unit.

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