Tuesday, according to the Wall Street journal, bankrupt Canadian network solutions company Nortel Networks Corp. (NT, NT.TO) has received an offer from Nokia Siemens Networks to buy key assets. Nokia Siemens sees this as an opportunity to expand its foothold in the U.S. wireless market. Both the companies have declined to comment on the report.

The Toronto, Ontario-based Nortel Networks and certain of its other Canadian subsidiaries have filed for bankruptcy in mid-January for protection from creditors. Nortel is currently in the process of a comprehensive business and financial restructuring with the goal of emerging from the creditor protection process as a more focused and competitive company, including selling off of parts of the company.

In mid-February, Nortel agreed to sell certain portions of its application delivery portfolio to Israel-based Radware Ltd. (RDWR) for about $18 million. Under the terms of a Stalking Horse asset purchase agreement, Radware would assume ownership, handle product development and outstanding warrantees, but the products would still be promoted by Nortel in an OEM relationship with Radware.

Nokia Siemens Networks, a joint venture of Finland-based Nokia Corp. (NOK) and German engineering company Siemens AG (SI), is interested in buying large chunks of Nortel, including Nortel's carrier networks unit and wireless research unit. However, the sale of the wireless gear business, which generates most of the company's cash, will complicate the company's plans to emerge from bankruptcy as a standalone company. According to the report, Nokia Siemens seems to have made an unsolicited offer last month for large parts of Nortel's carrier networks group.

Nokia Siemens is mainly interested in Nortel's wireless research unit in order to cash in on the LTE wireless technology, which is being rolled out by the world's largest carriers in coming years. Nortel's LTE wireless technology is a high-speed wireless technology intended to replace the technology that cell phone networks currently rely on. The technology is also slated to be launched by wireless telecommunications carriers like Vodafone Group PLC (VOD) and Verizon Wireless, a joint venture of Vodafone and Verizon Communications Inc. (VZ).

Meanwhile, Avaya Inc. and Siemens Enterprise Communications reportedly bid for Nortel's business telecom unit last week. Nortel has reportedly held talks for the sale of its enterprise unit with potential buyers including Avaya, which is backed by a private-equity consortium, and Siemens Enterprise Communications, a joint venture of Siemens AG and private equity firm Gores Group LLC.

Nortel continues to implement other aspects of its reorganization plan, including a round of layoffs announced in February. In addition to the previously announced 1,800 workforce reductions, Nortel stated in February its intention to slash global workforce by a further net 3,200 positions.

Further, the board of directors has approved changes to Nortel's employee compensation programs in order to maximize stakeholder value and emerge as a more focused and competitive company. The Board also has approved management's recommendation to not pay any bonuses under the Nortel Annual Incentive Plan or AIP for 2008.

Additionally, Nortel stated that it is seeking Canadian court approval to terminate its equity based compensation plans. The company also has decided to suspend awarding further equity in 2009.

Both the economic downturn and technology downturn have left Nortel grappling with a steep drop in demand for its voice-only wireless equipment, which is the company's bedrock. The company recently reported a loss in its fourth quarter, being the fifth straight quarterly loss. Nortel was once considered as Canada's largest company with market value of over $250 billion in 2000 amid the telecom boom.

Early last month, Nortel reported a wider loss for the fourth quarter, hurt by charges and a drop in sales reflecting lower volumes across all businesses and geographies. Net loss was US$2.14 billion or US$4.28 per share, wide than US$844 million or US$1.70 per share a year ago. Quarterly revenues declined 15% to US$2.72 billion from US$3.20 billion in the prior-year period, as the market continued to deteriorate and customers either reduced or deferred spending.

The company had also received notice in December from the New York Stock Exchange that it faced delisting if it couldn't bring its share price above the required $1 minimum in the next six months.

NT last traded at $0.32 on January 13, 2009.

NT.TO closed Tuesday's regular trading session on the Toronto Stock Exchange at C$0.23, down C$0.015 or 6.12% on a volume of 1.12 million shares, lower than the three-month average volume of 7.46 million shares. In the past 52-week period, the stock has been trading in a broad range of $0.08 to $10.83.

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