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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

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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.
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.
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."
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)
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).
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