Alliance Bumps Up Nortel

Nortel(NT Quote) rose 4% Tuesday after the struggling network gearmaker set plans for a "strategic alliance" with Microsoft (MSFT Quote).

The companies said the pairing is "based on a shared vision for unified communications" and "has the potential to ultimately transform businesses communications, reducing costs and complexity and improving productivity for customers."

The release comes a day after Nortel shares hit a 52-week low. The company has been hard hit by the consolidation of its big phone-company customers and by its own financial missteps, culminating in a series of earnings restatements.

"The alliance will accelerate the availability of unified communications -- an industry concept that uses advanced technologies to break down today's device- and network-centric silos of communication (such as e-mail, instant messaging, telephony and multimedia conferencing) and makes it easy and efficient for workers to reach colleagues, partners and customers with the devices and applications they use most," the companies said.

On Tuesday, Nortel surged 8 cents to $2.04, and Microsoft added 21 cents to $22.69.