Nortel Rises on Speculation It Will Form Venture With Motorola
By Vivek Shankar
Feb. 13 (Bloomberg) -- Nortel Networks Corp., North America's largest telephone equipment maker, rose the most in three months in New York trading on speculation it may combine its wireless business with that of Motorola Inc.
The companies have been in talks for about a month, the Wall Street Journal reported this week, citing unidentified people familiar with the situation. Nortel Chief Executive Officer Mike Zafirovski said the company is open to making acquisitions, according to a report from a German newspaper today.
Some investors are betting that a Motorola deal may go through, helping to reduce costs for Nortel, said Jim Kelleher, an analyst with Argus Research in New York. The company's wireless infrastructure unit accounted for about a third of its revenue in the first nine months of 2007.
``Someone out there is testing the waters for a partnership'' Kelleher said in a telephone interview. ``Such a partnership may eliminate some redundancies.''
Nortel rose $1.29, or 13 percent, to $11.60 at 4 p.m. on the New York Stock Exchange, the biggest gain since November. The shares fell 44 percent last year. Motorola climbed 17 cents today to $11.73.
Jay Barta, a spokesman for Toronto-based Nortel, declined to comment, as did Motorola spokeswoman Kristine Mulford.
A combination of the two businesses would control 45 percent of the market for gear based on so-called code division multiple access, the dominant mobile-phone technology in the U.S., according to UBS AG analyst Nikos Theodosopoulos. A deal would cut costs for both companies, the New York-based analyst said in a note yesterday.
Zafirovski spoke to Germany's Frankfurter Allgemeine Zeitung.
To contact the reporter on this story: Vivek Shankar in San Francisco at vshankar3@bloomberg.net |
