May 28, 2009 -- Nortel (search Lightwave for Nortel) announced that its principal operating subsidiary, Nortel Networks Ltd., has decided to seek a buyer for its majority stake (50% + 1 share) in LG-Nortel (search Lightwave for LG-Nortel), the company's Korean joint venture with LG Electronics. The joint venture has been particularly prominent in the optical communications market as a vendor of WDM-PON technology.
Nortel said the goal of the sale is "to secure a sound future for the LG-Nortel business, its valued customers, and loyal employees."
A Nortel spokesman said the company would not issue any comments on the announcement.
"LG-Nortel is a profitable, standalone business with a strong balance sheet, and has not filed for creditor protection. The joint venture has enjoyed solid revenues and profits since its establishment in November 2005, with several significant customer wins in Korea and abroad," Nortel said in a press statement. The company cited a "management operating margin" (defined as revenues less cost of revenues, SG&A, and R&D expense) of $341 million, or 27%, in 2008, and 26% for the first quarter of 2009.
"LG-Nortel is a successful business with an accomplished leadership team, a culture of innovation, a dedicated employee base and a drive to succeed," said Mike Zafirovski, President and CEO, Nortel. "As we work to evaluate the ultimate path forward for all of our businesses, this decision will allow LG-Nortel to embark on the next phase of its journey and realize its full potential."
Goldman Sachs has been hired to assist with the divestiture. Any sale would require approval from LG Electronics and the Ontario Court.