Nortel CEO mulls over takeover opportunities

Nortel CEO mulls over takeover opportunities

Refuses to comment on a report that Nortel was in talks with Motorola to combine their wireless infrastructure units.

Thursday, February 14, 2008

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FRANKFURT, GERMANY: Nortel Networks' chief executive will examine potential takeover opportunities when they arise, he told a German newspaper, but declined to comment on media reports of a unit merger with Motorola.

"We are a normal company again, have doubled our expenses for R&D and are spending less money on lawyers to deal with accounting problems," Mike Zafirovski told Germany's Frankfurter Allgemeine Zeitung in an interview.

"We are becoming more visible in the market again and can rely on organic growth again. But if the right opportunity for an acquisition arises, we will of course look at it. I can't say more on the issue of Motorola," he told the paper.

Zafirovski would not comment on a report in the Wall Street Journal on Monday that the company was in talks with Motorola --the world's third-largest mobile phone maker -- to combine their wireless infrastructure units.
The paper had said the talks could create a joint venture with sales of around $10 billion, combining businesses that make network equipment for wireless phone carriers.

Any deal would follow a wave of mergers in the global telecommunications sector, as equipment makers combine in a bid to gain economies of scale and more pricing power against telephone carriers that are also merging.

"It is important for us to stabilize the business and to make the company profitable again after difficult years," he added.

Since the end of the technology boom, Toronto-based Nortel, North America's biggest telecoms equipment supplier, has been hit by tough competition, cost-cutting, sector consolidation and internal problems, including a series of financial restatements.

Zafirovski said Nortel aimed to reach a double-digit operating margin without giving a specific time frame, as the company hopes to benefit from a next-generation high-speed wireless network based on an emerging technology known as Long Term Evolution (LTE) and WiMax, which provides wireless broadband Internet access over large distances.

He added that services could account for up to 40 per cent of its business in the next three to four years, making up around 20 per cent at the moment.

©Reuters

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