The involvement of Silver Lake private equity firm in the acquisition of Skype lends itself to speculation about how Skype technology will be integrated with that of Avaya, which is also part-owned by Silver Lake. It also raises the question of how much Avaya will be willing to bid up its $475 million stalking horse ante to acquire Nortel Enterprise out of bankruptcy. But there's another way to look at the Skype deal with regard to the impending Nortel auction: As Allan blogged, three private equity firms came together to pony up the $1.9 billion for Skype. Nortel Enterprise will almost certainly come at a much lower price tag; might there be more private equity firms able and willing to put together the financing to make a run at Nortel Enterprise as bidding closes this week? The U.S. firm, MatlinPatterson, which is also a major Nortel bondholder, has been vocal about its interest in bidding on parts of Nortel; could there be others? I don't have any inside information on this, but it doesn't seem implausible to expect multiple private equity bids.
As an aside, assuming Nortel does go for $1 billion or less, how sad is it that one of the leading enterprise technology firms, builders of core systems that many of America's largest companies rely on to stay in business, is apparently worth half as much as a company that, while it isn't only about free software, still occupies nothing like the role that Nortel has in business-critical communications?
Sulkin cites Skype's annual revenues as $600 million. Nortel Enterprise, even after a disastrous 1Q09--the quarter in which it filed for bankruptcy--is still on pace to generate more than twice Skype's total this year.
