Nortel deal likely to mean more layoffs

Staff writerSeptember 14, 2009 

An employee works in the manufacturing area at Nortel's RTP site.

STAFF FILE PHOTO BY CHRIS SEWARD

Bankrupt Nortel Networks selected a winning bidder for its Enterprise Solutions business, a step that will help decide the future for hundreds of local employees.

The bad news is that the deal is likely to mean additional layoffs at Nortel. The Canadian company still employs about 1,850 at its Research Triangle Park campus, down from a peak of more than 8,000 at the beginning of this decade.

The telecommunications equipment maker today agreed to sell its Enterprise unit to New Jersey-based Avaya for $915 million. The deal still requires approval from the bankruptcy court and antitrust regulators and could face resistance from other bidders.

The companies expect the deal to close later this year.

Avaya isn't ready to discuss specifics, but does expect to retain about 75 percent of the Enterprise division's employees, said spokeswoman Lynn Newman.

"We haven't really gotten to the point in the acquisition to make decisions about specific products, facilities or people," she said. "As we can share more information, we will. For now, we're still separate companies and still competing."

Nortel spokesman Jay Barta declined to comment beyond a news release, which didn't include details such as on how many RTP employees are part of the Enterprise division or what will happen to them.

Avaya's winning bid does include $15 million for employee retention. The company will want to keep many Nortel workers to avoid any disruptions for customers.

The Enterprise unit sells communications, data and network security products and services to businesses and government agencies including the U.S. Postal Service, Social Security Administration and New York Stock Exchange.

The deal removes "a level of uncertainty and provides a clear path for customers and employees," said Joel Hackney, the unit's RTP-based president, on a conference call.

The deal is expected to close later this year.

Nortel filed for bankruptcy protection in January, after sales fell and losses mounted. The company is auctioning its parts under bankruptcy court protection.

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