TD Securities analyst Chris Umiastowski has a new report on the telecom equipment market entitled "Who’s Next to Get Hitched?". He works on the assumption Nortel will attempt to stay independent rather than seeking out a mega-merge a la Alcatel-Lucent. Instead, Umiastowski focuses on a key M&A market – GSM/UMTS – where he believes a lot of strategic maneuvering could happen. For Nortel, the GSM/UMTS market is a fish or cut bait situation. Umiastowski believes Nortel must get bigger or get out of the business. The most obvious way to get bigger is buying Siemens’ communications business, which is apparently on the block. This will vault Nortel from #5 in GSM/UMTS to #2. The problem, however, is the Siemens business could also attract interesting from Motorola and Nokia. Umiastowski believes if a bidding war happens, Nortel will likely not be able to play if the price gets higher than 1.5 sales. Buying the Siemens business would be a huge strategic move for Nortel and CEO Mike Zafirovski, who has a huge amount of work to do to re-invent and reinvigorate the company in the wake of an accounting scandal and an increasingly competitive landscape.
Nortel’s Dance Partners