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Compaq, Nortel deal won't cut Cabletron

A new resale agreement between Nortel Networks and Compaq Computer shouldn't affect a similar deal between the computer giant and Cabletron Systems, according to the networking company.

Although Compaq Computer has added Nortel Networks' equipment to its services portfolio, the deal shouldn't affect the computer giant's relationship with Nortel rival Cabletron Systems.

Under terms of the pact, Compaq's services arm will become a Nortel Global Solutions Partner, requiring the computer company to sell at least $10 million worth of Nortel equipment. Compaq will deliver services and consulting to customers and will resell Nortel's enterprise corporate gear, which is largely made up of devices from the former Bay Networks.

A Nortel spokeswoman said the company expects to claim an additional $30 to $50 million in annual sales as a result of the Compaq agreement.

A spokesman for Cabletron said today's deal shouldn't affect their own resale agreement. Given Cabletron's current fiscal woes, the Compaq deal is thought to be a significant revenue source for the firm. Additionally, the resale deal is being expanded, according to the spokesman.

Also, while Nortel's agreement is with Compaq's services organization, Cabletron's agreement is with Compaq's product division.

"We have a very strong continuing relationship with Compaq," the spokesman said.

Digital Equipment, now part of Compaq, sold its networking equipment unit to Cabletron in late 1997, with the stipulation that Digital would sell more than $1 billion worth of Cabletron technology over the next three years.

Compaq inherited that deal, and continues to resell Cabletron equipment. The contract Cabletron initially signed as part of the Digital acquisition is now being revised to include a wider range of new Cabletron products.

The revised pact, which is currently being finalized, also includes new provisions that will allow Compaq to sell Cabletron equipment under its own brand, according to the Cabletron spokesman.

Compaq could not immediately be reached for comment. The computing giant rolled out an expanded list of services partners in February.

Compaq also has support arrangements with other networking giants 3Com and Cisco Systems.