Nortel turns page; starts Chapter 11
- TAGS:bankruptcy, Chapter 11, Nortel, NT
- IT TOPICS:Careers, Government & Regulation, LAN/WAN/Broadband/Wireless, Networking Hardware
In Thursday's IT Blogwatch, Richi Jennings watches bloggers watch Nortel in financial trouble. Not to mention another great executive mustache...
Matt Hamblen reports:
Nortel Networks Corp. customers: Don't panic and rip out your Nortel gear. That's the advice of analysts who follow the Toronto-based network equipment provider, which filed today for protection from creditors under Chapter 11 of U.S. bankruptcy laws.
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The Chapter 11 law is designed to give companies in financial trouble some time to organize a plan for paying off debts, analysts noted.But having Nortel in Chapter 11 can be a thorny problem for the CIO of a large company that has entrusted its vital networks to Nortel, especially because Nortel has been under financial strain for around four years and faces debts of $4 billion, analysts said.
Andrew Willis, Jacquie McNish, and Matthew Hartley tag-team, eh:
Former technology titan Nortel Networks Corp. filed for bankruptcy protection Wednesday, a move that will likely see what was once Canada's great corporate success story broken up and sold to foreign rivals.Nortel's board of directors was meeting last night to deal with a financial crisis, as the economic downturn translates into a sharp drop in orders from phone company clients. The telecom-hardware manufacturer failed to find buyers for a number of divisions that were put up for sale in September, and faces the prospect of paying $107-million (U.S.) of interest on its debts tomorrow ... [It] will likely ... mark the end of chief executive officer Mike Zafirovski's four-year attempt to turn Nortel around.
John Murrell recalls:
It’s a sad state for a company that was founded in 1895 and at the peak of the tech boom had a $366 billion (Canadian) market capitalization, 95,000 employees, and a stock price that topped out at $1,231. A day before the bankruptcy filing, Nortel’s market cap was down to $192 million, its headcount was down to 26,000, and its stock price was less than 40 cents.
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For its part, the company maintained the unflagging optimism that has accompanied each step down the ladder ... As they say in Montreal, “Bonne chance.”
Here's Dan Morrill (no relation):
When you make equipment you should be around to service it as well. This will mean that it will be very hard to sell Nortel gear with this cloud hanging over their head, and might lead Nortel to surface in the dead pool as this gets worst. Moreover, this will make it harder for people who want to invest in the company, because this will mean that all the shareholders are wiped out, and bondholders will not get their payment. It will be much harder for Nortel to raise cash, or do business.While this might be good to preserve cash the company has, this is going to fuel the already hard to get money for your business routine from banks, and other sources. There is going to be blow back on this one that might not hit Nortel, but will hit companies that are in similar situations in the future.
Dean Takahashi looks for silver linings:
This is indeed a year when we’re likely to see some familiar tech companies and brands disappear. But at least there will be others that thrive in the recession to take the place of those that have failed.
On which, Alexander Muse muses, from the big state:
On first look this might seem like a bad thing. Nortel has a big presence here in North Texas and I am sure it will take a toll on many businesses and people, but I can’t help think there might be a silver lining.
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Nortel, by using its deep penetration into accounts and easy access to debt stiffled the ability of telecom startups to compete. With the bankruptcy and ultimate breakup of the company, there will be lots of room for innovation from startups and entrepreneurs in the telecom space ... where there was one unhealthy company I believe there might be a hundred small, nimble, innovative startups ready to fill the void here in North Texas alone.
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Just as forest fires cause great destruction, they are fueled by dead wood and allow new healthier forests to emerge.
But Ken Camp hammers in the pegs:
I’ve been predicting this for some time ... I’ve been critical and at time harsh about Nortel’s chances in the past few months. That comes from history dating back to the acquisition of Bay Networks many years ago. It was a poorly executed acquisition and Nortel failed dismally at integrating the one company who had a shot at truly giving Cisco a run for their money in the day.
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Since then, Nortel has fumbled acquisitions and failed to find their own identity for years ... it can only be attributed to the leadership at Nortel for the past ten years. Their technology solutions remains solid and viable.
And finally...
Buffer overflow:
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Richi Jennings is an independent analyst/adviser/consultant, specializing in blogging, email, and spam. A 23 year, cross-functional IT veteran, he is also an analyst at Ferris Research. You can follow him on Twitter, pretend to be Richi's friend on Facebook, or just use boring old email: blogwatch@richi.co.uk.
Previously in IT Blogwatch:
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