x
Optical/IP

Nortel Files for Bankruptcy Protection

Nortel Networks Ltd. has filed for Chapter 11 protection in the Delaware bankruptcy court in an effort to sort out its financial woes.

In a statement emailed to Light Reading the company noted: "Nortel today announced that it is filing for creditor protection in the US, Canada and EMEA. The company intends to emerge from this process as a more focused, financially sound and competitive Company. This is a step towards a global reorganisation of Nortel and the Company acted now because we have sufficient liquidity to both run our operations and restructure our business."

The news, though shocking, will hardly come as a major surprise as all the signs were pointing toward such an eventuality. (See Nortel's Zero Hour?, Nortel's Not Bankrupt Yet, Crunch Time for Nortel, and Nortel Culls 1,300 Jobs, Loses $3.4B.)

And, again not surprisingly, the news hammered Nortel's stock in pre-market trading, sending it down $0.25, more than 77 percent, to just $0.05.

There will be more on this story as details are announced.

— Ray Le Maistre, International News Editor, Light Reading

nodak 12/5/2012 | 4:13:37 PM
re: Nortel Files for Bankruptcy Protection Actually Corvis was threatening to sue Light Reading if they did not provide the name because of the proprietary information he was posting. He (I worked with him) wound up getting fired from Corvis because of it.
Sisyphus 12/5/2012 | 4:13:46 PM
re: Nortel Files for Bankruptcy Protection Indeed. No one wants to see the people get hurt, especially when we know that a lot of these people are good engineers that the industry has a need for - but of course now is exactly the time when we are going though a downturn that makes it hard for anyone, no matter how talented, land an equivalent job elsewhere after a long career.

My heart and best wishes go out to those affected. I truly wish that you persevere and find fulfilling employment elsewhere.

Best of luck, guys (and gals)... we are rooting for you!
timberall 12/5/2012 | 4:13:47 PM
re: Nortel Files for Bankruptcy Protection I was given 2 months advance notice back. Some of the people letgo with me found something internal(presumably through internal connections).

this after we were all reassured that we were all safe by my immediate manager in a really boisterous manner. that was the ~13 th wave of workforce reduction.

But the canadian Employment Insurance is very irritating. Though i contributed money in that kitty for 7 odd years they said because i got a package have to wait 6 months or so. And then i made the decision to do higher studies and then the EI people said you are doign studies volutarily and hence NO EI. What a crock...

timberall 12/5/2012 | 4:13:47 PM
re: Nortel Files for Bankruptcy Protection I was given 2 months advance notice back. Some of the people letgo with me found something internal(presumably through internal connections).

this after we were all reassured that we were all safe by my immediate manager in a really boisterous manner. that was the ~13 th wave of workforce reduction.

bitdropper 12/5/2012 | 4:13:47 PM
re: Nortel Files for Bankruptcy Protection You, and other employees that want to get your story out, should get in touch with our editors.

Your PR reps may not give us access to top execs and, if they don't, I'd like to present at least one point of view that takes into account what's happening inside the company, how employees are reacting, etc.

Cheers,
[email protected]

--------------------------------------------------------------------

Just a word of warning to Norties.

Several years ago, a Corvis exec using the screen name of "opticalguy" (I think that was it) provided inside info on these boards. LR ended up publishing his real name in what they claimed was in the interest of journalistic credibility. Many of us who severely chastised LR for this action had our posts deleted (and as additional punishment...our bananas demoted). :-)

Be very careful what you post.
Pete Baldwin 12/5/2012 | 4:13:47 PM
re: Nortel Files for Bankruptcy Protection timberall -
I think you're right. There's word about this in the Globe & Mail:

http://www.theglobeandmail.com...

OTOH, I've also heard word of someone in Canada who's just gotten a layoff notice -- with 13 months' advance notice. So while there may be no severance, he's got a year to find another job. (This is second-hand, unconfirmed, and it's only one data point -- anyone know if it's standard practice in Canada?)
Belzebutt 12/5/2012 | 4:13:48 PM
re: Nortel Files for Bankruptcy Protection I remember also when Nortel ditched the access division. xDSL, or any form access was starting to take off all over the world. It was right when they decided to sell this division, that access took off.

I see lots of people here have skewed memories. Yeah, I remember IMAS and that other access stuff we had. None of it worked reliably, and by the time "access took off" these products didn't get any market traction because they simply weren't far enough in development and maturity. As far as I can tell, most of the bitter people here worked on what they thought was the flagship product, the one on whose success the company depended on. That's what most people who work on big projects start to believe. Then when they're let go, they feel that the company can't go on without them and that their product cancellation is due to politics and bad decisions.

If you scan through the posts in this thread you see lots of conflicting opinions on the decisions on the company made. It's the DMS people's fault. It's the managers' fault. It's the execs' fault. It was cancelling product X that hurt us. It was cancelling product Y. It was spending too much money on product Z. Just goes to show that there are no easy answers.
bitdropper 12/5/2012 | 4:13:48 PM
re: Nortel Files for Bankruptcy Protection Jesus, right angle turn ? It has been years since I heard this. :)
-----------------------------------------------

I too remember JRs "right angle turn". What none of realized at the time though, was that the angle was from horizontal to vertical. :-)
timberall 12/5/2012 | 4:13:48 PM
re: Nortel Files for Bankruptcy Protection * that for those still standing there is no severance package or extended health coverage anymore.
* people who were laid off before chapter 11 had their severance package cancelled this week..

Again it is via grapevine...
melao 12/5/2012 | 4:13:51 PM
re: Nortel Files for Bankruptcy Protection I remember also when Nortel ditched the access division. xDSL, or any form access was starting to take off all over the world. It was right when they decided to sell this division, that access took off. They believed that Optical revenues would be enough. Later they believed that NGN would be enough, later enterprise telephony. Later well, chapter 11.
jepovic 12/5/2012 | 4:13:52 PM
re: Nortel Files for Bankruptcy Protection I would argue protectionism killed Nortel, and possibly Lucent as well.

What is the biggest change in telecom in the last 15 years? The Internet? Bah, from an telecom equipment sales point of view the Internet business is tiny compared with wireless (10%?). In many ways, telecom IS wireless nowadays. THIS is the biggest change the last 15 years.

The US early on chose to take its own route and focus on local standards, such as CDMA. Then the US govt used its powers to force this technology onto other countries, such as Brazil and Korea, even though CDMA was already way behind. The idea was of course to support the local suppliers: Lucent, Nortel and Qualcomm.

This whole strategy fooled the local suppliers. The strategy provided enough volume to support the business reasonably well short-term, but in the long run CDMA was doomed. Lucent and Nortel put way too much resources into deadend technologies (much like they did in ATM), instead of trying to catch up in the GSM/WCDMA/LTE race. Remember, Huwaei has managed to become a challenger in the GSM market in a few years time.
bollocks187 12/5/2012 | 4:13:52 PM
re: Nortel Files for Bankruptcy Protection Why not we have the US govt saving the idiots in the banking industry....who are the worst criminals around.

Yet a company like NORTEL and more importantly the good folks, which I am sure there are many are getting screwed by incompetent management.
timberall 12/5/2012 | 4:13:53 PM
re: Nortel Files for Bankruptcy Protection However, looking from the outside, I can see this coming for the past 3-4 years. And yet, I kept my Nortel stocks to the tone of $300k in loss.

The idea is that after $280k in losses, there is no need to save the remaining $20k. Too painful to even look.

The biggest problem with Nortel is that the company is sick to the bone. The layoffs are reverse selection. Each time, the layoff is not done to make the company better. Rather, the managers layoff the most productive and brightest employees and keep the deadwoods. That way, the managers will easily keep their job in the next round (the deadwoods will be their cushion).

The DMS folks are all politicians and poisioned the whole company. RIP my youthful years with the greatest tech company in Canada.

----

After 23 years in the telecom industry and 12 years with Nortel, I have just been layed off and given a package.

I now find myself sitting here trying to understand what I can do. I am in the US on a work visa and will be required to leave at some point.

Nortel says they have lots of cash but they refuse to pay what they promised to pay. Like a lot of good people, I may be forced to default on everything I own.

--->
timberall 12/5/2012 | 4:13:53 PM
re: Nortel Files for Bankruptcy Protection 1) NT has had very bad track record in acquisition of new companies. BNI, Winnipeg is a classic example. They bought the firm for its products and employees. After they bought it they moved the people to Ottawa and dismantled the product completely.

2) Where was the due diligence when you make a bid to buy a firm?

3) When you give $500K for every submitted resume inspite of knowing that the person who submits the resume knows well they the resume person wont join the company the writing was on the wall.

Seriously the Board of Directors were doing squat in all these.

Those who don't speak bad about the company milked all these stuff(incl. grabbing free pizza after every TGIF parties) while the ones who speak bad toiled and got the feeling that they were used.

Mind you after all post NT career has been a challenge. You would think outside Ottawa firms will have a good opinion about people who worked for what was once a good company. NOPE. IT is not the case for many of the exNT people i know.



inauniversefarfaraway 12/5/2012 | 4:13:54 PM
re: Nortel Files for Bankruptcy Protection dearhigh-tide,letmeprefacethismessagebyreiteratingthegreatjoyexperiencedagaintoday,itcomesasacompletesurprisethattheexperienceisthisprofound.everymorningisbrighterwiththeknowledgethatevilpeopleeventuallydopay.itmaytakesometime,buteventually,thefruitofouractions,goodandbad,isreturnedtous.letthisbeaguidingprincipleforyouhigh-tide.itwasgreattoreceiveconfirmationandvalidationthatnorteliscompletelydisconnectedfromreality.itwouldbegreattobeaflyonthewallastheyrollouttheevidenceonthemountainofdebt.itisgoingtobespectacular.thejudgesaregoingtobecomepaleasghostswhentheyseetheskeletons.itwouldnotbeasurpriseafteraperiodofreviewthattheyproceedwithliquidationinsteadofbotheringwithsavingthiszombie.itcanonlybehopedthatthemanagementatnortelisentirelyvacated.havingprovedtheirmettlewithjohnroth,frankdunnandnowbankruptcy.ifyoubelievemyrighttoselfgracioulsyprovidedbylightrreading,forwhichiamgrateful)isoffensive,pleaseseeatherapistsincethisissomethingyouareunabletocontrol.itlookslikeyouareconsideringrunningawaylikealittlegirl(nooffencetolittlegirls).incidentally,youroutrageisentirelyjustified!itisalsomisdirected.yes,terriblethingsweredone,welloutsidetheboundsofthesociallyacceptable.yes,itisnotonlyalltrue,itisalsojustthetipoftheiceberg.thereisplentyofevidencetoo.thisisnottheforumforit.therewillbenovulgardisplayofdirtylaundry,nospectacle.alotisquitehumorouswiththebenefitofcontext.mybesthopeisthatitwillonlygetfunnier,whichitinevitablywill.althoughnortelwouldnowbepressedtotakeonalibelordefamationsuitatthisjuncture,beadvisedthattheywouldlose.suchfrivolouschargesaredismissedbythetruth,somethingthatihaveinamplesupply.itwouldbeapleasuretowitnessthisfurtherhumiliationofthearrogantnortel.instead,itlookslikeyourinsignificantneedlingwillhavetosuffice.youarequitemistakeninyourassumptionsofbeinglaidoff,dismissed,lostmoneyinholding...instead,itwaspossibletoseethecorruptionwithinnortelandattemptagracefulexit.thisiswhentheyshowedtheirtruecolorsandconirmedtheircruelandwickednature.itisagainapleasuretowatchthisspectacleunfold.soyouareoff-sideheremydearfriend.unlessyouwishtocompensatemeformytrouble,theshowwillgoon.beadvisedthatiamquiteareasonablepersonandifnorteliswillingtorightthewrongs,wecancometoanmutuallysatisfactoryagreement.wecandiscussafigurethatwouldsoothemyachesandpainsandpossiblysavemanyfromtheeternalburningfiresofhell,whoknows?wearetalkingabouteternityhere,sothereisn'tgoingtobeadiscount,youwouldbegettingsomelastingvalue,unlikeanythingnortel.itisimpossibletomakeoutanytruthinyoursubsequentstatements,youwillhavetocountonthegraceoffate.youwillneedalotofgoodluck,becausefateseemstohavefoundaplumptargetinnortel.youknow,whatispeculiaristhatmuchoftheillsthatplaguenortelstemfromaverysimplehumanfailing.itcanbebestsummarizedbythethreewisemonkeys.anethicsofficerwithnortelwouldneedtosufferfromaveryspecificsetofdisabilitiestosurvive,theidealcandidatewouldhavetobeblind,deafandmute.youmustsharesomethesequalitiestobesoendearedwithnortel.itisgoingtobeadisappointmentforyouwhenthemusicstops.formanywithinnortel,thismustbearelief.atlastanendtothemoralassault,theconstantcompromiseoftheirethics,theprositutionoftheirprinciples.theytoowillbeliberatedfromthetyranny.thankyouagainforthelaughsastheybringsmilestoall.joy!joy!joy!
inauniversefarfaraway 12/5/2012 | 4:13:54 PM
re: Nortel Files for Bankruptcy Protection dearhigh-tide,letmeprefacethismessagebyreiteratingthegreatjoyexperiencedagaintoday,itcomesasacompletesurprisethattheexperienceisthisprofound.everymorningisbrighterwiththeknowledgethatevilpeopleeventuallydopay.itmaytakesometime,buteventually,thefruitofouractions,goodandbad,isreturnedtous.letthisbeaguidingprincipleforyouhigh-tide.itwasgreattoreceiveconfirmationandvalidationthatnorteliscompletelydisconnectedfromreality.itwouldbegreattobeaflyonthewallastheyrollouttheevidenceonthemountainofdebt.itisgoingtobespectacular.thejudgesaregoingtobecomepaleasghostswhentheyseetheskeletons.itwouldnotbeasurpriseafteraperiodofreviewthattheyproceedwithliquidationinsteadofbotheringwithsavingthiszombie.itcanonlybehopedthatthemanagementatnortelisentirelyvacated.havingprovedtheirmettlewithjohnroth,frankdunnandnowbankruptcy.ifyoubelievemyrighttoselfgracioulsyprovidedbylightrreading,forwhichiamgrateful)isoffensive,pleaseseeatherapistsincethisissomethingyouareunabletocontrol.itlookslikeyouareconsideringrunningawaylikealittlegirl(nooffencetolittlegirls).incidentally,youroutrageisentirelyjustified!itisalsomisdirected.yes,terriblethingsweredone,welloutsidetheboundsofthesociallyacceptable.yes,itisnotonlyalltrue,itisalsojustthetipoftheiceberg.thereisplentyofevidencetoo.thisisnottheforumforit.therewillbenovulgardisplayofdirtylaundry,nospectacle.alotisquitehumorouswiththebenefitofcontext.mybesthopeisthatitwillonlygetfunnier,whichitinevitablywill.althoughnortelwouldnowbepressedtotakeonalibelordefamationsuitatthisjuncture,beadvisedthattheywouldlose.suchfrivolouschargesaredismissedbythetruth,somethingthatihaveinamplesupply.itwouldbeapleasuretowitnessthisfurtherhumiliationofthearrogantnortel.instead,itlookslikeyourinsignificantneedlingwillhavetosuffice.youarequitemistakeninyourassumptionsofbeinglaidoff,dismissed,lostmoneyinholding...instead,itwaspossibletoseethecorruptionwithinnortelandattemptagracefulexit.thisiswhentheyshowedtheirtruecolorsandconirmedtheircruelandwickednature.itisagainapleasuretowatchthisspectacleunfold.soyouareoff-sideheremydearfriend.unlessyouwishtocompensatemeformytrouble,theshowwillgoon.beadvisedthatiamquiteareasonablepersonandifnorteliswillingtorightthewrongs,wecancometoanmutuallysatisfactoryagreement.wecandiscussafigurethatwouldsoothemyachesandpainsandpossiblysavemanyfromtheeternalburningfiresofhell,whoknows?wearetalkingabouteternityhere,sothereisn'tgoingtobeadiscount,youwouldbegettingsomelastingvalue,unlikeanythingnortel.itisimpossibletomakeoutanytruthinyoursubsequentstatements,youwillhavetocountonthegraceoffate.youwillneedalotofgoodluck,becausefateseemstohavefoundaplumptargetinnortel.youknow,whatispeculiaristhatmuchoftheillsthatplaguenortelstemfromaverysimplehumanfailing.itcanbebestsummarizedbythethreewisemonkeys.anethicsofficerwithnortelwouldneedtosufferfromaveryspecificsetofdisabilitiestosurvive,theidealcandidatewouldhavetobeblind,deafandmute.youmustsharesomethesequalitiestobesoendearedwithnortel.itisgoingtobeadisappointmentforyouwhenthemusicstops.formanywithinnortel,thismustbearelief.atlastanendtothemoralassault,theconstantcompromiseoftheirethics,theprositutionoftheirprinciples.theytoowillbeliberatedfromthetyranny.thankyouagainforthelaughsastheybringsmilestoall.joy!joy!joy!
timberall 12/5/2012 | 4:13:54 PM
re: Nortel Files for Bankruptcy Protection The politicians need not spend money. What NT needs protectionism. This should be much like Bell Canada which because of sole monopoly made tons of money until recently. Overseas calls were really a rip off until recently because only NOW many players were allowed to enter making the rates to fall down.

You can see the same thing in Cable business(CRTC does not allow foreign channels being imported directly). What happens is there are firms which just import channels, repackage and then sell it expensively to consumers.

Same thing in banking. The four big banks have monopoly and till now they had total control of everything. HSBC, ICICI etc., are very small players and will remain in the fringe.

So what NT needs is good old protectionism which will prevent foreign firms from setting up offices and selling stuff to Canadian firms.

One thing which worked in NTs favour is the installed product base. Customers bought from NT as they would not go under etc., unlike small startups. But now they wont buy unless NT can demonstrate quality and bringing the product as promised(which does NOT happen as NT promises to solve world hunger in first release of any product but then will remove functionality as it can't deliver what was promised)...
photon2 12/5/2012 | 4:13:55 PM
re: Nortel Files for Bankruptcy Protection Wow, interesting perspective. I was at Bay when Nortel purchased us. Nortel insisted on all day "information sharing" sessions that resulted in nothing but a waste of time. They went back up north, we went back to work. Also, the BN/BCN product line was never meant to be for SP networks. Nortel knew that way ahead of time, pre-merger. The Carrier product line of Versalar 15 and 25K were created for that, and promptly unsupported by Nortel headquarters in almost all ways since the optical division was doing so well, why work on routers? So everyone left. What I find amazing is that so few of the old Nortel employee's are still there, but it still acts like the old Nortel. Is it the water, the walls?
P2
melao 12/5/2012 | 4:13:55 PM
re: Nortel Files for Bankruptcy Protection Jesus, right angle turn ? It has been years since I heard this. :)

I personally still thinks, that the failure of Nortel is directly related to the fact that, the industry tried to transform itself from a high-cost, low growth industry, to a low-cost and high growth one.

But I can't help but to say that, since 2000 this company is struggling. Hard to think that they would turn around.

Btw, I am ex-NT too
Net Worthy 12/5/2012 | 4:13:56 PM
re: Nortel Files for Bankruptcy Protection I was working for Nortel when the Bay acquisition happened, and I had quite a bit of contact with ex-Bay employees. As a result, I think my perspective is reasonably balanced.

Yes, Nortel was dysfunctional in some ways, but so was Bay, created by the merger of SynOptics and Wellfleet four years earlier. Bay was schizophrenic because of the very different cultures of the two groups, and it was difficult to get the groups to agree on anything.

Nortel thought it was buying a lot of customer goodwill, but instead they discovered that those customers were all PO'd because of serious issues around recent release of the management software. Anyone remember the memo informing all Bay/Nortel employees that it was a firing offence to refer to Site Manager as Site Mangler?

Nortel also discovered, the hard way, that the enterprise-grade BN and BCN routers were not up to the standards that carriers expected. That PO'd a lot of Nortel's existing customers that were trying to build carrier-grade POPs.

The merger was great in the short term because it jolted the Nortel old guard and signaled the now-infamous "right angle turn". Medium term, it was a mess. Roth and House worked hard to overcome the impedance mismatch between corporate cultures but I suspect that a partnership would have worked better. Long term I cannot comment because I left Nortel before the bottom fell out and have not followed the enterprise product line.

The Nortel old guard did fight the right angle turn but the biggest problems were with decision making and efficiency. Those issues were deeply embedded in the corporate culture and the Bay acquisition was not much help in that regard.
HomerJ 12/5/2012 | 4:13:56 PM
re: Nortel Files for Bankruptcy Protection Much like Dexy's Midnight Runners, I'm sure we haven't heard the last of Nortel!

Oh. Right.
photon2 12/5/2012 | 4:13:56 PM
re: Nortel Files for Bankruptcy Protection Who's next? I hate to say it, but Ciena might be.
P2
alandal 12/5/2012 | 4:13:57 PM
re: Nortel Files for Bankruptcy Protection Tried to read all posts here ...

Wonder why people didn't name Mike Z much. Is he a right guy to lead forward if ..?
timberall 12/5/2012 | 4:13:58 PM
re: Nortel Files for Bankruptcy Protection ExNTites are bitter because most of them gave all what they can for the company. And when the company sends them out(mostly due to them not being worked with the people who have power) they feel like used and thrown out.

When the entire department gets canned that is a different story? Even then those who have connections find it easier to find a job elsewhere inside NT.
Stevery 12/5/2012 | 4:13:58 PM
re: Nortel Files for Bankruptcy Protection Actually, the bondholders are the senior debt which means they get their debt dealt with first and foremost.

But as you know, there are claims that get put ahead of the debtholders, at least in the US. So that was the nature of my question.
Sisyphus 12/5/2012 | 4:13:59 PM
re: Nortel Files for Bankruptcy Protection Of course, none of our collective after-the-fact analysis really matters. But I thinki that acquiring Bay was a great strategic move, but a totally mismanaged acquisition. Bay people, who were a very smart and capable lot, became very quickly frustrated with Nortel's rather feudal management style.

There were tons of very good ideas on how to bring Nortel to the forefront of next gen data networking, there was appalling execution - and the latter was also fueled by mismanagement. The old Nortel school resisted too much change too quickly, pushed back, delayed critical decision making and strategic projects, and the Bay core team disbanded into a plethora of local startups that thrived (and many folded) in the good old Internet bubble days.

And then came all the disastrous managerial moves, each team vowing to save Nortel, many of them just engaging in mindless cost-cutting without seemingly making any strategic bets at the end of the day. Nortel just kept retreating on all fronts, management unable to truly take a stand anywhere.

It is sad. I worked for Nortel many years ago, and it was one of my favorite professional experiences. Great middle management with smarts, loyalty and passion for the company (even as far back as the Paul Stern days the ideas coming from executive top management seemed rather odd).

Hopefully this becomes an opportunity to truly renew it and pick a strategic growth area. But what's left - where can Nortel achieve leadership again?
paolo.franzoi 12/5/2012 | 4:13:59 PM
re: Nortel Files for Bankruptcy Protection
Actually, the bondholders are the senior debt which means they get their debt dealt with first and foremost.

Debt reduction is not shared equally by all.

seven
Stevery 12/5/2012 | 4:14:00 PM
re: Nortel Files for Bankruptcy Protection nice post. Here's a correction tho:

Finally, I am well aware of the anger of shareholders

You might as well start calling them ex-shareholders, cuz they're not going to see a canadian dime after the bankruptcy.

Which begs the question: A judge is now going to force haircuts to bondholders, shareholders, employees, management, retirees, suppliers. I'm surprised that I haven't seen any opinions on the haircuts-to-come.
High-Tide 12/5/2012 | 4:14:00 PM
re: Nortel Files for Bankruptcy Protection A few thoughts on some of the posts directed my way. As a self-identified Nortel employee, I have no desire to be anyone's dart board, but have no need to hide behind a totally anonymous screen name, either. I know by posting as such, I am opening myself to it - so I am not complaining. My beef is with Inauniverse. In my opinion, a responsible person does not get on a message board and make outrageous, inflammatory claims, hiding in total anonymity. Substantiate them with facts, or donGÇÖt post it. Hateful posts do not further a cause - they call the poster's motivation into question. His diatribe is short on facts and long on accusations.

The less professional posts are an unfortunate distraction from the otherwise enjoyable experience of browsing these boards. You take the bad with the good - and I applaud Light Reading for making the forum available.

I do not defend the bad management decisions that have been made here, or blame all of Nortel's issues on the dot-com bust. However, there is no doubt that it was a major contributor, from which we have never recovered. Most of us lived through all of that - and we know there is plenty of blame to go around for the foolishness in this industry. My reference to that era was my searching for the cause of Inaunivese' anger - I suspected he was downsized during the bust of 2000 - but that was just a guess. Nortel had no choice but to fire thousands - we acquired several companies and the model was not sustainable. Had Nortel cut deeper earlier, we might not be in the soup today.

I disagree with the idea that Bay Networks was a bad acquisition. Bay products are the core of our data products today - and Enterprise is profitable. Further, the portfolio has nothing to apologize for. It's true we donGÇÖt have strong market share compared with Cisco, but these products perform extremely well and our customers love them. Leading up to July of this year, we posted seven quarters of growth in Enterprise. The economy has stalled that for now, though with our increased investment in Enterprise, we could actually gain market share if Nortel stays the course. Proof point - our new 5600 stackable Gig switch - it is a solid offering and I'm not sure there is an equivalent out there.

Finally, I am well aware of the anger of shareholders - that anger is justified. As a shareholder, I too have taken a considerable loss. Our recovery plan WAS working until the economy collapsed. As much as I am frustrated with the things that were not done well these past three years, one should recognize that many operational targets had been met, allowing for a ton of cost to be removed from the business. We ran out of time. Now, we restructure.

I'll withdraw for awhile and enjoy your posts.


Stevery 12/5/2012 | 4:14:01 PM
re: Nortel Files for Bankruptcy Protection Not a bailout ($30M, for a company that has $2.4B in cash already, seems like a token), but it sounds like they're working to make sure "Nortel," in some form, lives on.

I might be interpreting this wrong, though - anyone else have any thoughts?


The $30M is part of the nuts-and-bolts of bankruptcy that many people have forgotten, and illuminates an aspect of the business landscape that many folks are about to be educated about.

In a liquidation bankruptcy, there is a prioritized waiting line for that $2.4B in cash on the balance sheet; the judge pays the bankruptcy lawyers first, then the rest of the waiting line. In a reorg (like nortel), the $2.4B is most likely not liquid or already spoken for. So who pays the lawyers who are working the bankruptcy for the company (for example)?

In the US, it is called Debtor-in-Possession financing (DIP) and is meant to be only very short term.

Now here's the reason it is interesting: There are several giants in DIP capital, but GE capital was a giant source of DIP financing in the US. But GE capital has fallen on hard times (because of their own stupidity) and so DIP financing is now more rare and expensive to come by.

So the giant wave of retail/housing/services/insurance bankruptcies that is going to happen over the next year? Many of those who would like to go the reorg route (ch 11) will instead be forced to liquidate (ch 7). And what will the effect of bankruptcy fire sales be? Right, more bankruptcies, because the fire sales will cause more deflation in assets.

Can you say "Deflationary Spiral"?


[My apologies to my friends in the Great White North: I don't know the equivalencies between US and Canuck laws. Hell, I don't even know US law.]
HomerJ 12/5/2012 | 4:14:01 PM
re: Nortel Files for Bankruptcy Protection Ahh, General Tao. You are a fierce warrior, but your chicken is delectable.
Lite Rock 12/5/2012 | 4:14:02 PM
re: Nortel Files for Bankruptcy Protection Yeah Craig, I know a few people on Twitter and do see the attraction. I'll make you a deal, you don't tweet about rain and I won't tweet when there's a tornado. :-)

I think folks that have been run over by the Nortel Bus just need a couple good fall guys to sink their teeth into. The fall guys can either die or go to prison for oh, say 25 years.

I found it very straight forward to get Bernie's Federal Prisoner Number so I could keep him updated on how my life it going. I got my final WCOM/Bernie settlement payment last year just couldn't wait to let him know the good news!!

A wise man once told me; "Don't despair, it always darkest just before it goes pitch black."

Cheers
Pete Baldwin 12/5/2012 | 4:14:02 PM
re: Nortel Files for Bankruptcy Protection Thanks Lite Rock, glad you appreciated it. :)

Full disclosure: I'm actually *on* Twitter. It can be fun, and yeah, self-indulgent. Not convinced it's going to change my life, but it's got some usefulness. And I'll try never to tweet about it raining.
bollocks187 12/5/2012 | 4:14:03 PM
re: Nortel Files for Bankruptcy Protection
Insofar....

Is it everyone you dislike at Nortel or the management practices.

Perhaps a merger of Nortel and "H" isa match made in heaven - Hutel or Norwai.


timberall 12/5/2012 | 4:14:03 PM
re: Nortel Files for Bankruptcy Protection read it as tech bust NOT boom..:)
beowulf888 12/5/2012 | 4:14:03 PM
re: Nortel Files for Bankruptcy Protection Can't speak for MicroSloth, because they're still milking a cash cow (but that cow might die real soon).

Cisco on the other hand has aggressively expanded their product portfolio. Most recently they created a skunk works spinoff, called Nuova, that created an innovative FCoE switch (the Nexus 5000). Then spun Nuova back into their company. And they're charging full speed ahead with their Data Center portfolio (Nexus 7000 + a bunch of other products in the pipeline).

And then there's their CRS-1. It's been very successful, and lean and nimble Juniper had a hard time responding.

Also, unlike Nortel, Cisco hasn't fumbled its acquisitions. Cerent was the last big company they purchased (2000?), and although they may have overpaid for it in retrospect, it didn't really cause them any heartburn. Unlike Nortel's history of wasting enormous sums on acquisitions that yielded them nothing.

I think you'll have Cisco to kick around for at least the next decade to come, baitnswitch.

Cheers,
--Beo
timberall 12/5/2012 | 4:14:03 PM
re: Nortel Files for Bankruptcy Protection High-Tide IGNORE AUTHOR Number: 21
Subject: Re: Mortel: getting what you deserve! Date: 01/14/09 05:27 PM
Rate This Post:

Just what universe are you from, anyway? Wherever it is, it's not far enough away from me for my liking.

I am deeply annoyed by your post - you must be deranged.

I work for Nortel, and no, this is not our proudest moment. That said, I am anything but evil, and I stand with many smart, hard-working people. In fact, the quality of the people I work with is the primary reason I am here. Yes, the company has made it's share of mistakes, and many have suffered since the 2000 boom gone bust. Most have moved on - you clearly have not.

----

have you visited CBC today. Take a look at the people who have posted over there in response to todays NT story. Many of them worked for once great NT. They are bitter because their hopes and aspirations were simply quashed. One woman has written that her husband won an award for some important accomplishment and then came back to see he was let go. What a horror...

You are very simplistic when you blame NTs misfortune on the tech boom. They bought companies without doing proper due diligence and they had to write off many of them.

And then the financial book manipulation happened. My only question to you at this point will be "what the heck were the Board of Directors doing eh"... They were getting paid for what?

litereading 12/5/2012 | 4:14:04 PM
re: Nortel Files for Bankruptcy Protection I have questioned if Light Reading is serious journalism covering the telecom/datacom industry, or drivel like you find in the rack in line at the the grocery store. After reading the article and the messages posted, I recommend you change your name to The National Enquiring Very Light Reading... Pathetic...
paolo.franzoi 12/5/2012 | 4:14:04 PM
re: Nortel Files for Bankruptcy Protection
Did Harvey Mudd return from the grave?

seven
High-Tide 12/5/2012 | 4:14:05 PM
re: Nortel Files for Bankruptcy Protection Universe - I do not wish to silence you - just counter what I view as your outragous statements. I do my work with integrity - as I suspect most do.

Nortel is not evil. You may have been wronged - but that will come down to individual circumstances with individual people. You paint with a very broad brush. Often people simply refuse to accept the business climate that forces difficult business decisions. Sometime these decisions affect people unfairly.

What I think you will find truly liberating would be to release the negative feelings you harbour. This will be for your own good - not so much mine. I wish you well - it seems like you need it more than I.

HT
inauniversefarfaraway 12/5/2012 | 4:14:05 PM
re: Nortel Files for Bankruptcy Protection Dear High-Tide,

This is amusing.

If what you state were true, Nortel would not be in the sad state it is in. The only added clue for Nortel would be a seat on the Dr. Phil show:

"You're bankrupt, your business is in the hole, you ca't build new products that compete, you're on the Dr. Phil show. Life gives us clues."

You state yourself that the wrongs inflicted upon individuals are the result of business circumstances, where is integrity under such circumstances? Trading it for "opportunity"?

Can shareholders, governments, employees, contractors, suppliers, customers can expect the same treatment? That is what Nortel's track record reflects. This doesn't leave too many people rooting for you buddy.

There is nothing sacred in what Nortel holds except itself. This is the definition of evil.

Nortel doesn't see itself as contributing. It is not taking responsability for it's actions, it is everybody else's fault. Shareholders are disgrunteled, customer's don't have faith...

The position that Nortel has no moral fiber is supported by the facts, hence it is never going to accomplish anything but whine about being a victim of business conditions.

If Nortel had a mission that involved making things better instead of blaming everything outside itself, maybe it would have a chance.

Whatever is caused by Nortel is solely on Nortel's shoulders. The broad strokes you speak of, they are Nortel's. Can't find an advocate here? Even the Devil has one of those.

So, it really is about you, dear Nortel. Please continue entertaining us.

Good luck with your integrity Mr. High Tide, if you have to say it... it's most likely bunk!

Again, this is a very happy day, thank you!
inauniversefarfaraway 12/5/2012 | 4:14:06 PM
re: Nortel Files for Bankruptcy Protection Dear High-Tide,

All those who are responsible know very well what they have done and continue to do. They believe they are right, just like you. Doing what they can.

When there is an encounter, they swiftly avert their eyes, they know what they've done and that it is wrong. Their words betray them. It is actually funny sometimes. Real life, far more bizarre than fiction can ever hope.

There is no anger on my part, rather, there is the satisfaction that the deeds put forth by the moral majority at Nortel are yielding their inevitable conclusions.

The road to hell is paved with good intentions.

As for me, there is little doubt that when we are judged for our deeds, there are many folks from Nortel that will writhe in agony for all eternity. This is will be a blessed sight.

Luckily, life is generously providing some advances on this Justice.

Those who endeavor and do good should expect the same in return. Every day we make choices, it is important to exercize wisdom and to make the hard calls.

The lesson here is that when you try to put an end to people's lives, there are consequences, especially when this fails. So, you may not have the answers you seek, but this is hardly what you really want. You believe that if you quiet the noise all will be well.

It is about a lot more than mere money.

Today is a clue! It seems that you are missing the point. This is hardly a shock.

So, unless you find the courage to do something about this, my work will continue.

BTW, there are no more shareholders, they were too demanding for Nortel, wanting their money back.

Nortel is evil. Let there be no doubt. They've been given every chance, all spoiled.

Have you considered some therapy for yourself? Perhaps you should take some of your own advice...

Know that you cannot intimidate, bully or manipulate me. It has already been tried by a lot of people at Nortel. So, unless you want to pony up some money, pay off this wonderful institution, call your lawyer, you are going to be reading every last letter. Thanks to Nortel, I have very little to lose. Is there anyting worse than a man with nothing to lose? Thank you Nortel: for the freedom! So... Enjoy it if you can't beat it.

You are very entertaining, tell me more about your work at Nortel.
High-Tide 12/5/2012 | 4:14:06 PM
re: Nortel Files for Bankruptcy Protection Hi Phil - we are not allowed - but I appreciate the opportunity.

HT
High-Tide 12/5/2012 | 4:14:07 PM
re: Nortel Files for Bankruptcy Protection Just what universe are you from, anyway? Wherever it is, it's not far enough away from me for my liking.

I am deeply annoyed by your post - you must be deranged.

I work for Nortel, and no, this is not our proudest moment. That said, I am anything but evil, and I stand with many smart, hard-working people. In fact, the quality of the people I work with is the primary reason I am here. Yes, the company has made it's share of mistakes, and many have suffered since the 2000 boom gone bust. Most have moved on - you clearly have not.

Please enlighten me as to how Nortel maligned you? Are you a shareholder? If so, get in line - many have been burned by this stock and so many others (including me). What else? Clearly something extraordinary happened to you. Frankly, I'm sick of your drivel - and doubt that I am alone. I respectfully suggest you consider counseling, anger management, a labotomy - whatever it takes - but spare us your thoughtlessness and endless negativity.

Nortel is not done yet - perhaps we are like the Knight in Monty Python. The employees are pissed at this turn of events. We're licking our wounds today, but tomorrow, we will be back on the front lines with our customers, as we always are, earning the business we win every day. Those I've spoken with today are supportive. They buy our products because they work, and because we support them well.

Thankfully, they have a much more rational approach to business decisions than you apparently do.

Why don't you come clean with who you work for - what your issue is? Get it out in the open - so we can help you before that hate makes you self-destruct.

HT
Hanover_Fist 12/5/2012 | 4:14:07 PM
re: Nortel Files for Bankruptcy Protection Nortel's first mistake was purchasing Bay Networks which, they thought, would catapult them from the traditional telecom (e.g., Bell Head) business into the high-tech world of networking (e.g., Net Head).

Compound this with a Canadian versus U.S. mental mindset battle and you have a sure-fire recipe for disaster.

It was a long bitter battle of "oil versus water" with the end result a likely break-up/spin-off/return-to the separate and distinct Carrier and Enterprise business units.
DCITDave 12/5/2012 | 4:14:07 PM
re: Nortel Files for Bankruptcy Protection High-Tide,

You, and other employees that want to get your story out, should get in touch with our editors.

Your PR reps may not give us access to top execs and, if they don't, I'd like to present at least one point of view that takes into account what's happening inside the company, how employees are reacting, etc.

Cheers,
[email protected]
inauniversefarfaraway 12/5/2012 | 4:14:08 PM
re: Nortel Files for Bankruptcy Protection It is without reservation that I express that this is one of the happiest days of my life!

Mortel declared bankruptcy before they succeded in destroying me! Ha! Ha! Ha! Yes, for them, destroying people is a "hobby".

Vindication at last! Remember the folks on the Death Star, they also thought they were the good guys. All the while, they were the problem. Should they have been shocked when there was a bright light?

In French, "Mortel" is literally translated as "Deadly"! Oh, the humor!

Thank you MNortel for the laughs.

The only thing that could top this year would be for AMCC to suffer the same ignominious fate.

These folks are wicked, nice to see them getting what they deserve!

Pour more billions into these pigs, watch the money disappear.

This should be a wakeup to all you evil people out there: someday, your deeds come back to haunt you! Do good, or else! If you're working on the Death Star, get out before it's too late!
Lite Rock 12/5/2012 | 4:14:08 PM
re: Nortel Files for Bankruptcy Protection You crack me up Craig!!

They're all Twitterpated.

I just love folks blaming Nortel/Big Business woes on the economy. OMG! When a company spends all it's time spinning itself don't be surprised when it losses it's way and falls off the cliff.

It's not the Cliffs fault that Nortel drove off of it!!

:-P
sam masud 12/5/2012 | 4:14:08 PM
re: Nortel Files for Bankruptcy Protection This globalization is going to get us down to a few 1000-pound gorillas who'll rule the jungle. BTW, the remark about eating kung pao was not nice at all (to say the least--and I could say more, a lot more).
Pete Baldwin 12/5/2012 | 4:14:09 PM
re: Nortel Files for Bankruptcy Protection Several hours and 999 bajillion tweets later, people are still posting Twitter messages like: "OMG, Nortel bankrupt!! www.tinyurl.SameStoryEveryoneElseTweeted"

The triumph of social media.

I'm told something similar happens every time it rains in silicon valley. "OMG, rain!!"
glasstotheass 12/5/2012 | 4:14:09 PM
re: Nortel Files for Bankruptcy Protection In my dealings with Nortel, I have had the pleasure to deal with some very bright and competent engineers and managers who have challenged me and made my company better. Best wishes to Nortel to pull out of this slump and rise again.

G2A (anonymous to avoid brown-nosing)
sigint 12/5/2012 | 4:14:10 PM
re: Nortel Files for Bankruptcy Protection I have a theory that large technology companies have a finite lifespan that seems to follow roughly the same path.
____________________________________________________

I guess IBM would be a counter-example. Perhaps, there's a lesson in there for all tech-companies, get out of commodity businesses, go the services route, or perish.
opticalwatcher 12/5/2012 | 4:14:10 PM
re: Nortel Files for Bankruptcy Protection "I have a theory that large technology companies have a finite lifespan that seems to follow roughly the same path."

Yeah, that has to be it. Couldn't be the large economic downturn that closed up the markets Nortel was spending money (and incurring debt) to go after, or the enormous pension liability that the market downturn created for them (and the US carmakers too).

Yes big companies have advantages and disadvantages, but Nortel was just as big last year and didn't go bankrupt then. As James Carville used to say "It's the economy, stupid."
baitnswitch 12/5/2012 | 4:14:12 PM
re: Nortel Files for Bankruptcy Protection I have a theory that large technology companies have a finite lifespan that seems to follow roughly the same path. They tend to become victims of their own success, getting big and bloated, with too many layers of management overseeing too much process. Risk taking is minimized in order to preserve the status quo. Innovation is stifled to the point where new product initiatives become a money draining fiasco. The only new technology in the product portfolio comes from hit or miss acquistions. Engineers get laid off or outsourced such that the management bloat and an obsolete product line are the only things left.

Maybe that lifecycle is 30 or 40 years or longer, and there are always exceptions to the rule. But where are the old electronics companies of the '50s and 60's - Zenith, Westinghouse, Philco - shadows of their former selves if not gone altogether. Lucent had to merge with Alcatel just to stay alive. Watch companies like Unisys and others that had their heyday 30 years ago to witness the next in line.

Have companies like Cisco or Microsoft already jumped the shark? Possibly. I can't think of any real innovation that has come from Microsoft or Cisco in the last 10 years and can think of several failed product initiatives. Microsoft Connected Services Framework, and arguably Vista come to mind. And what ever happened to Cisco's softswitch? These companies have become followers and not leaders. They may still have a couple of decades left, but even the mighty will eventually succumb.
Creagh 12/5/2012 | 4:14:12 PM
re: Nortel Files for Bankruptcy Protection The problem has to do with the underlying mass market technologies Nortel have to offer, like most other vendors its just not there. IMHO the mass telecoms world market which will now go through the mother of all consolidations will be dominated by Cisco and Huawei and a couple of interesting emerging new technology based vendors in the dynamic optical switched transport domain for wireline and wireless markets - Ireland and Israel hold the most potential here as the breeding ground for these new players. Unfortunate situation for Canada - Nortel was a brilliantly managed company in the 90's.
inauniversefarfaraway 12/5/2012 | 4:14:13 PM
re: Nortel Files for Bankruptcy Protection When public opinion sides, it will go down, up or sideways.
Pete Baldwin 12/5/2012 | 4:14:14 PM
re: Nortel Files for Bankruptcy Protection Canadian government pledged $30M and (probably more importantly) a helping hand in talking to the banks about post-filing financing:

http://www.lightreading.com/do...

Not a bailout ($30M, for a company that has $2.4B in cash already, seems like a token), but it sounds like they're working to make sure "Nortel," in some form, lives on.

I might be interpreting this wrong, though - anyone else have any thoughts?
bollocks187 12/5/2012 | 4:14:15 PM
re: Nortel Files for Bankruptcy Protection once again - someone in Canada fix this once proud Company.
Lite Rock 12/5/2012 | 4:14:16 PM
re: Nortel Files for Bankruptcy Protection Well Nortel has been notorious for their pompous attitudes, ruthless penny pinching with suppliers, contractors, and employees. Now it continues with the further shafting of creditors, suppliers, employees and retirees.

Who's next? I say Sprint is next for Bankrupcy or aquisition. But in the long run does it really matter?
cw.774 12/5/2012 | 4:14:17 PM
re: Nortel Files for Bankruptcy Protection Well how about the mgmt team known as the Canadian Gov't?
fgoldstein 12/5/2012 | 4:14:17 PM
re: Nortel Files for Bankruptcy Protection homerj, what about kimchee?
freetoair 12/5/2012 | 4:14:18 PM
re: Nortel Files for Bankruptcy Protection is there even a Canadian in the mgmt team?
laserboy 12/5/2012 | 4:14:18 PM
re: Nortel Files for Bankruptcy Protection HomerJ, with comments like your last one, you name is a perfect fit
Stevery 12/5/2012 | 4:14:18 PM
re: Nortel Files for Bankruptcy Protection I hope those Nortel people like the Kung Pao chicken. They will be working for their new Chinese masters soon enough.

Perhaps. But you should notice that Nortel is about to hammer a whole lot of their weak creditors (like retirees). They have an opportunity to forge an improved cost structure, which non-Ch 11 folks will not be able to emulate.

If there's going to be a wave of reorgs, the guy who does it first is at an advantage. Whether our canuck management friends are able to capitalize on this advantage is, of course, the question.
Stevery 12/5/2012 | 4:14:19 PM
re: Nortel Files for Bankruptcy Protection The only question in my head: Who's next?
HomerJ 12/5/2012 | 4:14:19 PM
re: Nortel Files for Bankruptcy Protection I hope those Nortel people like the Kung Pao chicken. They will be working for their new Chinese masters soon enough.
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