Nortel Networks Corp., North America’s biggest maker of telephone equipment, filed for bankruptcy protection in the U.S., a victim of the global credit crunch and declining sales.
Nortel, based in Toronto, had more than $1 billion in assets and debt, according to a Chapter 11 filing of its U.S. subsidiary today in Wilmington, Delaware. Fourteen affiliates of Nortel’s financing unit are seeking similar protection in Delaware. Five units filed for bankruptcy there under Chapter 15. Nortel said Canadian affiliates also will seek protection.
“It’s the end of a saga,” said Benoit Lalonde, vice president of fixed income at Laurentian Bank Securities, a unit of Canada’s seventh-largest bank. Laurentian doesn’t own Nortel debt. “Nortel is a corpse awaiting burial. I’m sad to see it happen but the tears were shed many months ago.”
Nortel has lost almost $7 billion since Chief Executive Officer Mike Zafirovski took over in 2005, leaving him struggling for funds to operate the company.
Ya. All my phones at work are Nortel!
I remember being in Ottawa in ’04 and seeing the building that used to house Nortel that were empty…
You know their is healthy competition and then their is cut throat competition. It has been apparent to me that for a long time consumers have been expecting something for almost nothing. Free phones with plans and then they jump from carrier to carrier for the cheapest plan. I guess this will only leave us with a few carriers. Then I can only imagine how the rates will go up.
Phone systems are no longer big boxes that lock people into a single vendor. You could be like all the movies and have a Cisco phone on your desk, but it could be connected to an Asterisk or Avaya back end.
Bad management decisions.
Nortel made consumer phones and was one of the larger telephone manufacturers in North America. As regulations eased home ownership of telecommunication equipment, Nortel failed to keep up and was swamped by imported phones with better features.
Instead of changing to meet demand, Nortel closed their home telephone plants. Instead we saw giants like Nokia and the Chinese brands, take over the market.
Nortel is following the paths of other large telecommunication leaders that have been unfairly injured by unfair Chinese trade.
I live in the RTP area of NC, and there are a bunch of buildings that were once occupied by Nortel. Those buildings were more or less gutted years ago. It was just a matter of time.
Whoops! I was *just* about to apply for a job with them XD
I was the first to go at ComDev Last Name started with A! 7.50$ an hour about Five years ago.
after five years with no raises, We made the cell phone tower noisefilters(CDMA) and LNA Amplifiers for nortel .It is nice to Know they have got little time left.
They’re not bankrupt. They’ve sought Bankrupcy Protection, which isn’t the same as being bankrupt. They’re going to restructure the company. It will most likely be a chop-chop-chop procedure, were parts of it will be sold, parts will be shut down and the remains will be ‘Nortel’.
What happened? Bad management. Having John Roth going on a spending spree, Frank Dunn cooking the books and Mike Zafirovski stalling the company lead to what you see today.
@2 Paddy-O: I remember being in Ottawa in ‘04 and seeing the building that used to house Nortel that were empty…
There were many Nortel building in Ottawa. The biggest campus is still in business… the other buildings were released.
@5 Mr. Fusion
Good post.
$1200 to pennies a stock. Many hosers got hosed on this one.
# 9 Josh said, “There were many Nortel building in Ottawa. The biggest campus is still in business… the other buildings were released.”
Yes, I know. The former Nortel exec who I was with, showed them to me, along with many that were closed due to collapsing revenue…
@Josh and @Paddy-O – I used to work for them, then became a contractor for them. They never had the future in their site, only the next quarter. @Josh, you made a great point of the last three CEOs and I applaud your concise evaluation.
How can you keep a company running when you take your last 8 years of revenue and try to “restate” them to lower your profitable years to ‘fluff’ your horribly loss years? You can’t. What happens is you go from $90.00/share stock to $0.40/share stock in less than 18 months. How do they fix it? reverse stock split 1:7, jumps to $17.00/share then drops to today’s $0.28/share. They’ve been bleeding for years and never tried to make good forward thinking decisions.
That’s my opinion, but I only worked there =)
#11 – Paddy O’Bama
>>Yes, I know. The former Nortel exec who I was
>>with, showed them to me.
Damn! I gotta get me a job working the counter at the ‘Shack! You’ve got more friends in hight places than anybody I’ve ever heard of!
# 13 Mister Mustard said, “You’ve got more friends in hight places than anybody I’ve ever heard of!”
Ya, not living holed up in a basement can have that effect…
The phone system is made up of boxes with 9999 numbers in them and called switching centers. Your internet cheap phones still have to use those boxes to resolve what the phone routing for the numbers your punching in are. To a lot, it just happens with FM. (F**king Magic) But that ain’t so, takes real electrons running in real pipes to make it all work. Nortel (Northern Electric in the old days) made those boxes. Half the US is making phone calls out of those boxes to phones in other boxes.
It is sad to see the once proud companies that made North America the technology wonderland it was, suffer now from the greed of off shoring their work to cheaper manufacturing.
We have a problem understanding things and are caught up in the latest catchwords. Made in the USA, like for cars being built in the south. They are assembled in the USA, but they are designed, the parts are made offshore, and shipped to the USA for assembly. No US tool & die shops created the dies to stamp out their fenders, no USA Borg Warner made the ignition systems or carburetors. All parts made out of the country and brought here for assembly, so you can say your Toyota was made in the USA.
We have cheaped ourselves into poverty, and the past 8 years were the one the laid the final ax to the head of a once proud nation.
# 15 qsabe said, “and the past 8 years were the one the laid the final ax to the head of a once proud nation.”
Umm, Nortel is a Canadian company. In case you missed it, Canada isn’t the 51st State.
I think having a phone on each employee’s desk will be a think of the past. More and more companies are looking at installing a VoIP application on the PC workstation they already have on the desktop.
Other companies will take it to the next level and have their staff using portable VoIP apps on something like an iPhone, so they can roam the office using WiFi to call and be called.
The workstation VoIP apps will feed into a centralized phone server, that will route each call the cheapest way possible, sometimes using existing intranets, or shopping for the cheapest long distance or land line carrier for that moment.
At home, more and more people are opting to not install a land line, and a telephone. Between VoIP and their mobile, they have all the comms they want and can afford.
That being said, unless Nortell can become the top vendor of the VoIP servers/switches, then they will be the equivalent of a buggy-whip company in the start of the car era.
#16, Cow-Paddy, Ignorant Shit Talking Sociopath and retired Mall Rent-A-Cop,
Oh ignorant one, much of Nortel’s manufacturing was done in the US. They had bought up some of Western Electric’s assets when that company was being sold off piecemeal.
But I didn’t think they would know that at Radio Shack.
#13, Mustard,
Cow-Paddy’s high places are because the customers sit at high stools at the Radio Shack counters.
18,
Well, Nortel IS ostensibly a Canadian company. but, like most multinationals they register in Delaware since corporate tax there is nil. Same with corporate responsibility.
Nortel is a great example of how to fuck it up. At the bank that I work at (Corporate Interests Befrending Corporations) we just put in 13K Nortel VOIP phones. And they are so awkward to use I long for the days of the Nortel Vista 350… That phone was a fantastic piece of landline bliss for its day…
#20 Good points.
BTW, apparently Canada is to blame for GM & Ford dying as they have some manufacturing there… LOL
Two years ago, my company was buying a new soft switch to run our network. We had agreed to buy one from a company who promptly went out of business before we actually got anything finalized. We were strongly considering Nortel as our choice, but something didn’t seem right, so we went with a slightly more expensive bid. Boy am I glad it worked out that way. Nothing like buying something that’s supposed to be a 20 or 30 year investment and having the company go bankrupt after 10 months.
At least Canada’s showing the good sense to not try to bail them out. If a company fails it fails, that’s what bankruptcy laws are for. Not everything is solved by dumping tons of money on it.
They cooked the books so many times even Gordon Ramsay couldn’t save them.
#24
Don’t bet on it. Some politician pin head was on the news tonight talking about helping them out.
In the spring of 2000 when Lucent warned on earnings. I called all my friends and told them to unload NT. None of them sold the stock. They would tell me they were in for the long term. They did not want to take the Cap gains tax hit. None of these people trade stocks, they didn’t get it. Now they can do a little tax loss selling. The sad thing is I still know people who own this stock.
NT is going into chap 7 in a few months when no bank will back them. Parts will be sold and NT will trade on the OTCBB pink sheets.
Burn Baby Burn!!!