Nortel sells another Key Unit

The dismantling of Nortel Networks Corp. continued to gather speed yesterday after the once high-flying maker of telecom gear revealed that it has struck a deal to sell off yet another key business unit.

Operating under bankruptcy protection since January, Nortel said it has reached a deal to sell its Enterprise Solutions unit to New Jersey-based Avaya Inc. for $475 million US in a so-called “stalking horse” agreement that could pave the way for future bidders.

Avaya had been touted as a likely bidder for Nortel’s enterprise business, which supplies phone and other communications equipment to business around the world and recorded sales of $395 million during the first quarter of this year.

The deal is similar to one reached last month with Nokia Siemens Networks for Nortel’s CDMA-focused wireless division.

The joint venture between Finnish handset maker Nokia Corp. and Germany’s Siemens AG has agreed to pay $650 million for the unit and has pledged to keep about 800 jobs in Canada. A spokeswoman for Avaya declined to comment yesterday on whether the company’s purchase of Nortel’s enterprise division would impact employees.

Mike Zafirovski, the chief executive of Nortel, reiterated in a statement that Nortel is no longer attempting to restructure and emerge from bankruptcy protection, but is instead trying to sell off its most attractive divisions to the highest bidders.

Nortel filed for bankruptcy protection in January, citing high debt, high costs and the impact of the economic downturn. The event marked the beginning of the end for a company that was once considered to be the brightest star.