Nortel gives cash boost to optical unit

Canadian networking giant Nortel Networks intends to invest nearly $2bn into its optical fibre business.

The move comes amid reports that it wants to sell the unit to rival Corning for a staggering $100bn.

Nortel plans to use most of the money, some $1.2bn, during the next 18 months to boost manufacturing of optical components and create more than 9600 jobs in the UK, US and Australia.

The remaining $700,000 will be used to increase production capacity for optical internet systems.

At the same time as Nortel announced its expanded commitment to optical components, the Wall Street Journal reported that it was negotiating to sell its components business to Corning.

Corning investors reacted badly to the reports, which would give Nortel investors a 50 per cent stake in Corning, driving the stock price down from $283 to $250 - a fall of 11 per cent.