Nortel Walks Away From Mobile WiMAX

Troubled telecom-equipment manufacturer Nortel Networks (NT Quote) has overhauled its carrier business, discontinuing its mobile WiMAX operations and ending its short-lived joint venture with Israeli wireless specialist Alvarion(ALVR Quote).

The Ontario-based firm, which recently filed for Chapter 11 bankruptcy protection, is desperately attempting to put its house in order, and hopes that its latest move will help it better manage its costs.

"We are taking rapid action to narrow our strategic focus to areas where we can drive maximum return on investment," said Richard Lowe, president of Nortel's carrier business, in a statement released Thursday. The executive explained that Nortel's existing WiMAX customers will move over to Alvarion, and he promised that existing support commitments will be met.

Nortel signed an agreement last year to integrate Alvarion's radio access network technology into its own network, backhaul and global services offerings and also resell the Israeli firm's WiMAX access products.

"Our priority is to minimize the effect on customers," said Tzivka Friedman, Alvarion's CEO, in a statement. "We will work closely with Nortel to ensure that the transition will be as smooth as possible."

Alvarion's shares nonetheless slipped 13 cents, or 3.8%, to $3.26 in Friday trading, outpacing the broader decline in tech stocks. The Nasdaq dropped 0.8% recently.

WiMAX technology, which was developed as a wireless alternative to broadband and DSL, has been gaining momentum, driven largely by sales of smartphones. Nortel's decision to exit a potentially lucrative 4G market, however, reflects the extent of the firm's recent problems.