Nortel Pulls Another Switch

Nortel (NT Quote) chief Mike Zafirovski turned another page on the company's big turnaround plan.

In an effort to refocus the Toronto telecom titan, Zafirovski moved Monday to spin off the company's blade server switch unit. Menlo Park, Calif.-based buyout shop Garnett & Helfrich Captial acquired Nortel's blade server business Monday. No terms of the deal were disclosed, but Nortel will receive a minority stake in the venture and control one of the four director seats.

The move underscores the difficulty big equipment makers have had trying to find new growth areas as demand for networking gear has dropped. Blade servers were expected to be a booming market as companies traded in older, fridge-sized equipment for faster, denser gear that fit on slide-in component racks.

IBM (IBM Quote) and Hewlett-Packard (HPQ Quote) have dominated the blade server arena. Meanwhile Nortel and rival Cisco (CSCO Quote) have battled as switch suppliers to the two blade server giants. Nortel's exit isn't exactly a shock, and Cisco seems to see more promise in areas such as blade storage, say industry observers. ...