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Telecommunications Nortel files for bankruptcy protection - UPDATED
Telecommunications Nortel files for bankruptcy protection - UPDATED | Nortel files for bankruptcy protection - UPDATED |
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| by Stuart Corner | |
| Thursday, 15 January 2009 | |
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Page 2 of 2 Mark Fioretto, vice president Enterprise, Asia South Pacific, said: "Our affiliates across Asia Pacific, including Australia, are not included in the Chapter 11 and [Canadian] Creditor Protection proceedings and are expected to continue to operate as normal. We remain fully committed to supporting our customers and partners in Australia and around the world through this process...The process we announced today is designed to translate our improved operational efficiency, double-digit productivity, focused R&D and technology leadership globally into long-term success."Featured Whitepaper
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Nortel's move into bankruptcy protection marks an astonishing fall from grace from a company that once dominated the Toronto Stock Exchange, accounting for a third of total value. At the peak of the tech boom in 2000 it was worth $C366 billion and employed 95,000 people. This week before its shares were suspended, it was worth just $C192m and employed only 26,000 people. Zafirovski was brought on board in October 2005 replacing caretaker CEO Bill Owens who took the position after the previous holder, Frank Dunn, was dismissed along with other senior executives over an accounting scandal. Zafirovski immediately embarked on a radical restructuring campaign saying that Nortel would have three key focus technologies going forward: mobile WiMAX, IPTV and the IP multimedia subsystem. The company said this week that "The global financial crisis and recession have compounded Nortel's financial challenges and directly impacted its ability to complete this transformation. Nortel is taking this action now, with a $2.4 billion cash position, to preserve its liquidity and fund operations during the restructuring process. " However Zafirovski's transformation plans have suffered other setbacks in the past three years. Mobile WiMAX in general is running years behind schedule and now expected to struggle to achieve its initial promise thanks to the growing momentum behind rival cellular technology HSPA which has a clear upgrade path to LTE and beyond. In another setback for Zafirovski, a planned joint venture with Huawei was scrapped. He had talked up the planned JV as "a bold opportunity to combine the strengths of Huawei and Nortel into a company that can aggressively target and win share in the rapidly expanding ultra broadband market." Late last year Huawei was reported to have offered $US400m for Nortel's ethernet division, but concerns about the security implications scuppered the deal (Huawei has close ties to the Chinese Government and Nortel's gear plays a hey role in critical US government networks). Zafirovski also sold off, to Alcatel, Nortel's 3G WCDMA infrastructure business saying that at less than 10 percent of total revenues it lacked the scale and momentum needed to become profitable. Thanks in no small measure to the popularity of mobile broadband around the world, the 3G WCDMA market is booming. |
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