Ciena Targets Nortel Division: Report

Network specialist Ciena ( CIEN) may be about to pounce on part of troubled telecom equipment manufacturer Nortel Networks ( NT), according to a Bloomberg report.

Nortel, which filed for bankruptcy protection in January, is still working out its long-term strategy, although there has been plenty of speculation about its future.

The Canadian firm is rumored to be carving off key assets, suggesting that the firm may break itself up rather than emerge from bankruptcy as planned.

Citing an anonymous source, Bloomberg says that Ciena is eyeing Nortel's metro Ethernet networks business, which would be valued at around $300 million.

The firm had originally announced the sale of its metro Ethernet networks division in September, only to suspend the sell-off earlier this year.

Both Nortel and Ciena refused to be drawn on talk of a possible acquisition.

"We do not comment on rumor and speculation," was the response from Nortel spokesman Mohammed Nakhooda. Ciena spokeswoman Nicole Anderson emailed a similar note to TheStreet.com.

Nortel has nonetheless started to sell off parts of itself. Israeli network specialist Radware ( RDWR), for example, has already scooped up Nortel's switch business for an undisclosed fee, and the company's carve-up may continue.

It has been rumored that Nortel has attracted interest in its core wireless business and a separate enterprise unit that builds telecom equipment for enterprises.

A number of companies have reportedly expressed an interest in buying Nortel's enterprise business, including Avaya and Siemens ( SI), a move which would not be completely out of the blue.

Nortel filed for protection from creditors in a last-ditch attempt to get its house in order after a turbulent period characterized by falling sales, a financial scandal and massive internal upheaval.

The company was one of the top suppliers to the Internet building boom at the turn of the century but was later crushed after the bust when the industry was left with an oversupply of telcos and network capacity.

Talk of possible Nortel M&A did little for Ciena's shares Friday. The company's stock fell 38 cents, or 5.22%, to close at $6.90, despite a modest advance in tech stocks that saw the Nasdaq rise 0.38%.

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