Nortel Goes to the RIM

The two Canadian-based companies said on Tuesday they had entered a research and marketing deal that would see Nortel invest US$25 million into RIM. Not only do they intend to cooperate in the creation of future wireless Internet technologies, but they will sell RIM_s products globally. Nortel makes networking and other products designed to push more video, voice, and data down pipelines and sells them to phone companies trying to cope with exploding Internet usage. Analysts said the deal gives Nortel, headquartered in Brampton, Ontario, a chance to get an inside look at the burgeoning wireless technology industry. RIM's palm-sized products provide email and Internet access. The $25 million is tiny for multibillion-dollar Nortel, said John Kim, a portfolio manager at Transamerica GrowSafe, but "it does give them a window on emerging new handheld technologies that are out there." Waterloo, Ontario-based RIM will benefit from its ability to piggy-back on Nortel_s sales links with phone companies around the globe. Nortel_s investment in RIM will be at prevailing market prices and is subject to regulatory approval. Investors reacted with approval for both RIM and Nortel. RIM (RIMM) shares climbed C$7.25 or 9.9 percent to C$80.25 on the Toronto Stock Exchange by early afternoon on Tuesday, edging closer to its 52-week high of C$92. In Toronto, Nortel (NT) rose C$2.45 to C$137.65. Last year investors and analysts lauded RIM_s products, sending the stock soaring from a 12-month low of C$10.40.