Nortel Sells Off Application Delivery Portfolio
According to the two companies, Radware will acquire a host of Nortel's application switching and WAN optimization products, including Application Accelerators 510 and 610; Application Switches 3408E, 2424E, 2424 SSL E, 2216E, 2208E; and Virtual Services Switch 5000.
"We initiated discussions with Radware in late 2008, as part of our efforts to streamline investments around our future direction to speed and simplify business communications," said Joel Hackney, Nortel's Enterprise Solutions president.
Under the terms of the purchase agreement, which were not disclosed, Radware will assume ownership, product development and outstanding warranties of Nortel's application delivery portfolio, though the gear will still be available and promoted by Nortel in an OEM agreement with Radware, Nortel said.
Nortel added the application switch line to its portfolio in October 2000 through the acquisition of Alteon Web Systems in a $7 billion stock deal.
The acquisition comes as Nortel continues to struggle. The Toronto-based company filed for Chapter 11 bankruptcy protection in January, after a series of public missteps and amid floundering revenue. In November, Nortel posted $3.4 billion in losses for the third calendar quarter, its largest loss in seven years, and said it planned to slash 1,300 jobs, impose a salary freeze and continue its already-in-place hiring freeze.
Nortel launched an ambitious turnaround plan in 2005, which has since been derailed by falling revenue and the global economic crises. Over the last four years, Nortel has cut roughly 18 percent of its work force and has fallen about $4.5 billion into debt.
Per the legal requirements for the acquisition, Nortel has filed the asset purchase agreement with the bankruptcy court along with a motion seeking the establishment of bidding procedures for an auction that allows other bidders to make higher offers.
According to Radware, the company will invest heavily in service and support for existing Nortel customers. The company said it will offer a five-year support product plan and continue to sell Nortel's application delivery products and invest in their development.
"We believe acquiring Nortel's Application Delivery Business is a strategic move that will directly benefit Radware and Nortel's [Alteon] customers," said Radware CEO Roy Zisapel in a statement. "Our ultimate goal is to provide them with a stronger, integrated product backed by world-class support and a globally-focused organization. We are committed to making this transaction seamless for existing Nortel [Alteon] customers and intend to take the necessary steps to ensure zero disruption to their business when the transfer occurs."
Along with divesting its application delivery offerings, Nortel has also abandoned its WiMax business as part of its restructuring plan. In January, Nortel ended an agreement with Alvariou, a deal which let Nortel resell Alvarion's WiMax products and fund its own WiMax developments.
In a statement, Nortel said the sale of the application delivery portfolio won't take away from its other operations.
"We remain focused on our Enterprise business to deliver our industry-leading networking infrastructure that comprises our end-to-end Unified Communications solutions, including real-time and wireless networking capabilities, services, security and integrated applications," Hackney said.