Nortel May Ditch LG Joint Venture

It could be the end of the road for Nortel's partnership with LG Electronics.
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Embattled Canadian telecom giant

Nortel Networks

(NT)

is rumored to be

selling off

its stake in a major joint venture with

LG Electronics

in a bid to boost its cash position.

The Toronto, Ontario-based firm has brought in Goldman Sachs to help sell off its 50% stake plus one share in LG-Nortel, according to the

Financial Times

. Said to be valued at around $1 billion, the joint venture was founded in 2007 to provide telecom and networking equipment to Korea and other markets such as Russia.

Nortel filed for bankruptcy protection in January, prompting much

speculation

about the company's future.

Both Nortel and Goldman Sachs declined to comment when contacted by

TheStreet.com

. LG-Nortel has not yet responded to a request for comment, although rumors that Nortel is carving off key assets have been circulating for months, suggesting that the firm may break itself up rather than emerge from bankruptcy as initially planned.

Earlier this month, for example,

The Wall Street Journal

reported that the telecom equipment maker had received a bid from

Nokia Siemens Networks

for its lucrative carrier networks group and a wireless research unit. Nortel has also reportedly received bids from

Avaya

and

Siemens Enterprise Communications

for its enterprise division.

Nortel has already sold its

Alteon switch technology

to Israeli networking firm

Radware

(RDWR) - Get Report

, and

Ciena

(CIEN) - Get Report

is said to be

eyeing

the firm's

metro Ethernet networks

business.

Earlier this week Nortel obtained an order from the Ontario Superior Court of Justice extending its bankruptcy protection until July 30. "The purpose of the extension is to allow the Nortel companies to develop a restructuring strategy for consideration by their creditors and Canadian Court," said the company, in a statement.

Last month Nortel appointed restructuring expert David Richardson to its board of directors, in a clear indication that the firm's metamorphosis is gathering pace. Richardson was previously Canadian national managing partner of

Ernst & Young's

corporate finance practice and served as senior partner in the firm's corporate recovery and restructuring practice.

The company had been wrestling with

plummeting sales

prior to its original bankruptcy filing. In its recent fourth quarter, Nortel's revenue plunged 15% year over year to $2.72 billion, although this was a 17% increase on the prior quarter.

Carrier networks accounted for the bulk of Nortel's sales with $1.23 billion, although this was 8% less than the prior year's quarter. Enterprise solutions were the next biggest revenue stream, bringing in $535 billion, 30% down on the same period last year.