Nortel CEO to Consider Takeover Opportunities: Paper

FRANKFURT (Reuters) – Nortel Networks’ chief executive will examine potential takeover opportunities when theyarise, he told a German newspaper, but he declined to comment on mediareports of a unit merger with Motorola.

"We are a normal company again, have doubled our expenses forresearch and development and are spending less money on lawyers to dealwith accounting problems," Mike Zafirovski told Germany’s FrankfurterAllgemeine Zeitung in an interview. An advance copy was released onWednesday.

"We are becoming more visible in the market again and can rely onorganic growth again. But if the right opportunity for an acquisitionarises, we will of course look at it. I can’t say more on the issue ofMotorola," he told the paper.

Zafirovski would not comment on a report in the Wall Street Journalon Monday that the company was in talks with Motorola ? the world’sthird-largest mobile phone maker ? to combine their wirelessinfrastructure units.

The paper had said the talks could create a joint venture with salesof around $10 billion, combining businesses that make network equipmentfor wireless phone carriers.

Any deal would follow a wave of mergers in the globaltelecommunications sector, as equipment makers combine in a bid to gaineconomies of scale and more pricing power against telephone carriersthat are also merging.

"It is important for us to stabilize the business and to make the company profitable again after difficult years," he added.

Since the end of the technology boom, Toronto-based Nortel, NorthAmerica’s biggest telecoms equipment supplier, has been hit by toughcompetition, cost-cutting, sector consolidation and internal problems,including a series of financial restatements.

Zafirovski said Nortel aimed to reach a double-digit operatingmargin without giving a specific time frame, as the company hopes tobenefit from a next-generation high-speed wireless network based on anemerging technology known as Long Term Evolution (LTE) and WiMax, whichprovides wireless broadband Internet access over large distances,

He added that services could account for up to 40 percent of itsbusiness in the next three to four years, making up around 20 percentat the moment.

(Reporting by Eva Kuehnen; Editing by Paul Bolding)

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