Hardware

Return to Article

Nortel Rises Again on Virtual Store News

James Rogers

Shares of troubled telecom equipment manufacturer Nortel Networks(NT Quote) rose again Monday, as the stock continued its recent rally.

After leaping more than 34% during Friday trading, the Canadian company's shares rose more than 5%, or 2 cents in late trading Monday to reach 41 cents.

Nortel, which launched a new family of Ethernet routing switches Monday, has also been ramping up its efforts around "second-life" style technology, recently announcing the first customer win for its web alive software.

The company confirmed Friday that PC giant Lenovo is using the web.alive application to create a virtual store where consumers can browse, check out PCs, and interact with other shoppers.

Dubbed the 'eLounge', the virtual store was showcased at the Consumer Electronics Show (CES) in Las Vegas last week and lets shoppers create virtual versions of themselves, which are known as avatars.

Virtual worlds, the best known of which is Linden Labs' Second Life, have been gaining momentum during recent years, with gamers, businesses, and consumers all looking to use the technology. Gaming rivals Sony(SNE Quote) and Microsoft(MSFT Quote), for example, unveiled virtual worlds for their game consoles at last year's Tokyo Game Show, and firms such as IBM(IBM Quote), Cisco Systems(CSCO Quote), and Sun Microsystems(JAVA Quote) have used Second Life for internal meetings and product launches.

Underlining its commitment to virtual world technology, Nortel also licensed technology from Epic Games last week to support its web.alive application.

Rumors also have continued to swirl about the sale of some of Nortel's assets, with Israeli network specialist Radware(RDWR Quote) reportedly poised to buy part of the company for between $30 million and $50 million.

Nortel, which has been wrestling with plummeting sales of its wireless gear, announced plans to divest its metro Ethernet networks business in September.

Ericsson, Huawei, Nokia Siemens(NOK Quote) and Cisco Systems have all been cited as possible purchasers of Nortel's Ethernet networks division, which could be priced anywhere from $500 million to $1 billion, according to analysts and media reports.

Last month Toronto's Globe & Mail reported that Nortel has received three separate offers that are close to $1 billion, although the company declined to comment on the report.

Despite its recent rally, Nortel's stock is still trading well below its 52-week high of $13.71 and perilously close to its 21-cent low. Nortel even received a stern ultimatum last month: Boost share price or get booted from the NYSE.