WHEN TO FOLD 'EM

Tough decisions are never easy. Yet Nortel Networks managed to make a good one last week when it finally sold the remainder of its optical components business to U.K.-based Bookham Technologies for $108 million in stock, assumed debt and cash. While it may not have been the deal of the century, it netted Nortel money for a unit that was bleeding cash and hurting its bottom line. It also came at a time when buyers and money in the bank are hard to come by. Overall, the sale should be good for a lot of people. Nortel gets the best of both worlds because it is released from a sizable financial burden, yet still has a contract to purchase the components it designed. The deal is also good for most of the unit's 1300 employees, of which 1000 are expected to stay on with Bookham. As for Bookham, it will likely do far better marketing the components to system vendors as an independent company than Nortel did trying to strike deals with its competitors. The deal is reminiscent of Nortel's access business sale to Riverstone Networks, which freed Nortel of a unit that wasn't generating enough cash to sustain itself. Now the task for Nortel and other companies is to pinpoint similar units that are hurting revenue or burning ever-so-critical cash, yet appeal to other players. They also must realize that even though sale prices may not reach expected levels, cutting under-producing units free at low prices is much better than shutting them down completely in desperation or keeping them limping along.