Motorola, Nortel looking for a way out

Can a little wheeling and dealing ease the pain at two struggling telecom players? Motorola (MOT) and Nortel (NT) are discussing a joint venture that would unite their wireless equipment businesses, The Wall Street Journal reports. The news comes just days after another big telecom gear company, Alcatel-Lucent (ALU), said sales of new wireless equipment fell short of expectations in the latest quarter, leading to a multibillion-dollar writedown. Even beyond the ill-fated Alcatel-Lucent tie-up, though, there is precedent for a wireless equipment deal: Two other big players, Nokia (NOK) and Siemens (SI), merged their infrastructure businesses into NokiaSiemens Networks last year.

Motorola and Nortel, of course, have their own problems. Motorola is trying to sell its money-losing handset business but wouldn’t mind unloading some other units as well to lighten the turnaround burden on new CEO Greg Brown. Nortel, meanwhile, has been flailing for years under CEO Mike Zafirovski, a Motorola alumnus who promised back in 2005 to return Nortel to industry leadership but has failed to make visible progress beyond a series of deep job cuts. One telling detail from the Journal story covers the proposed venture’s ownership structure. Nortel would own most of the new company and Motorola the rest, the Journal reports. The story adds that the companies initially wanted to bring in an outside investor to take a 20% stake, but that idea was “discarded after they had trouble finding a source of private equity.” No great surprise there.