Nortel Networks Corp.'s longstanding position on the M&A sidelines — combined with its impassioned insistence that it is indeed interested in M&A — is starting to look more than a little strange.

The company has not made any acquisitions since its December 2005 purchase of Tasman Networks Inc. for $99.5 million, but it has repeatedly stated since then that it was interested in doing more deals. On Monday, during a conference call  hosted by CIBC Oppenheimer analyst Ittai Kidron, the company insisted that it was not just paying lip service to the notion of M&A. When Kidron asked Steve Slattery, president of the company's enterprise division, why Nortel had not been more active in M&A, Slattery insisted that assessment was wrong.

"I can tell you that our M&A folks have been working feverishly for 18 months looking at a variety of opportunities," Slattery said, noting that Nortel was interested in outright acquisitions as well as minority investments and partnerships.

"We are constantly evaluating opportunities," he said. "But we are not going to overpay for an asset. It has to be accretive."

The curious thing about Nortel's insistence that it has not yet found the right kind of purchase is the fact that all around it, peer companies are buying like mad. Most recently this past June, when private equity buyers bought Avaya Inc. for $8.2 billion, questions swirled about why Nortel hadn't moved more swiftly to buy this company that could have enhanced its enterprise business.

Slatterly did not directly discuss Nortel's past accounting crisis, the loss of goodwill that resulted and the speculation that this had impaired its ability to acquire other companies. But he did say: "We don't feel hamstrung in our ability to execute. We just want to make good decisions."

Kidron seemed as confused as everybody else in  its aftermath.

In a research report on Tuesday, he wrote, "Nortel's business trends remain solid near term, yet we believe the company needs to consider M&A to shorten the time for its participation in [key business] segments." —Andrea Orr

See June 5 story from TheDeal.com
See December 2005 story from TheDeal.com
See February 2005 story from TheDeal.com

Tags: deals, m&a, mergers, Nortel