Nortel's Post-Auction BriefingNortel's Post-Auction Briefing

Because the stalking horse won the auction, the integration planning that has been taking place at Avaya and Nortel can continue to be fine-tuned and expanded upon.

After a decidedly long weekend, Nortel's President of Enterprise Solutions Joel Hackney got on the phone to answer press and analyst questions for 30 minutes this morning about Avaya's auction win. Admittedly, there's not much he could say.Asked, Hackney said he was not at liberty to say who the other bidders were. He confirmed there were two bidders, but said when documents are filed it should become clear who they were. He also didn't explain why what was to have been a one day process turned into three days, saying only that the doubling of the purchase price from the stalking horse bid showed the "effectiveness of the process."

One roadblock that Hackney did address, and dismiss, was the Verizon court filing last week. Specifically, he said, "We don't expect the Verizon interaction and news around it to impact court approval or the close of this deal."

At the end of the call, Wes Durow, Nortel VP of Enterprise Global Marketing and Strategy, prompted Hackney to discuss the retention of Nortel employees by Avaya. A published component of the deal is that Avaya will create a $15 million fund to be used for employee retention. Hackney expanded on that, saying that Avaya had agreed to a minimum employee transfer level of 75%, with expectations that the final proportion may be even higher than that.

While that sounds good, there is a major caveat--the 75% applies to the number of Nortel Enterprise employees when the deal closes. Those of us in the industry have seen the number of Nortel enterprise employees shrink on an almost daily basis, both from layoffs and good talent finding safer places to go. As a result, it's difficult to say what number of Nortel people will finally swell the employee ranks of Avaya.

There is good news for both parties in the fact that the stalking horse was the auction winner. It means that the integration planning that has been taking place at Avaya and Nortel can continue to be fine-tuned and expanded upon. That's in sharp contrast to what happened with the Wireless business, where all the planning work by Siemens-Nokia and Nortel had to be scrapped and begun again when Ericsson won the auction.

As was true when Avaya was announced as the stalking horse, this is just one more step in a process that could eventually end in Avaya NOT acquiring Nortel's Enterprise business. The biggest remaining roadblock would seem to be anti-trust issues, mainly in the United States.Because the stalking horse won the auction, the integration planning that has been taking place at Avaya and Nortel can continue to be fine-tuned and expanded upon.