Not sure quite to make of the news that Nortel has won a five-year, $2-billion contract to provide equipment and services to Verizon Wireless. From previous experiences dealing with Nortel and large contracts, I’m reluctant to trumpet the fact Nortel has won a $2-billion contract because who really knows if $2-billion of business will actually materialize over the next five years given technology changes, strategy changes and consumer behavior changes. Nevertheless, there has to be some good news from the fact Verizon will be using additional CDMA2000 radio base stations, switching, IP platforms, optical networking solutions and related equipment from Nortel.
“This contract confirms Nortel’s leadership in supplying innovative CDMA mobile broadband technologies and driving advanced communication services,” said Nortel’s Richard Lowe. “It’s our long term partners that know us best, so we’re particularly proud when an industry leader like Verizon Wireless asks us to be part of their team for another five years.” Of course, it’s fine to be the leader in CDMA other than the fact CDMA’s on the decline while GSM is on the rise but that’s another story for another day.
In mid-day trading, Nortel is up 58 cents to $24.33. A Reuter story on the deal can be found here.
More thoughts: I knew there was a reason this story sounded eerily familar. In January 2004, Nortel signed a five-year deal estimated to be worth $5-billion with Verizon Communications to migrate the carrier’s local and long-distance networks to Internet-based technology from older circuit-based systems. The agreement made Nortel the exclusive provider of Verizon’s local and long-distance class four and class five switches, and Voice-over-Internet Protocol and multi-media services equipment over the next 18 months. I’d be very surprised if Nortel will collect $5-billion from this agreement.
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