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Re: Nortel Sells UMTS Unit
by
Ross
Mark,
It would be interesting to understand how the analysts arrived at their estimate of the deal's value. In fact, I had previously heard that Nortel was expecting between $1.3b and $1.6b for the deal. In an early August rumour of the deal in Unstrung, they said such a deal was might fetch $1.9b, and in a release today, they claimed that others in the French investment community had expected the sale would bring $1.25b.
All these estimates are a far cry from the $320m that Nortel received and the $500m that others were expecting.
Given Alcatel's greater ability to deal effectively with engineering and labour costs in France (the centre of Nortel's UMTS labs and business), and considering the technology that they are gaining, as well as the fact that the acquisition bumps Alcatel up into the number 3 market position, I would have expected the business to be worth significantly more to Alcatel.
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