Nortel files for bankruptcy

Struggling Canadian networking company plans extensive business, financial restructuring

Financially struggling Nortel Networks filed for Chapter 11 in US bankruptcy court Wednesday.

The Toronto-based company is seeking creditor protection in the US, Canada and EMEA (Europe, the Middle East and Africa), it said in a statement.

Nortel gave "full consideration to the alternatives" to bankruptcy, but given the current economic downturn decided that bankruptcy is in the company's best interest long term.

The telecommunications equipment vendor will undertake "a comprehensive business and financial restructuring" and expects to emerge from the bankruptcy process "more focused, financially sound and competitive."

Nortel had a US$107 million bond payment due Thursday. Last month, the New York Stock Exchange informed the company it would be delisted if its share price did not rise above the minimum $1 within six months. Nortel shares ended Tuesday on the NYSE trading at $0.32, with trading halted Wednesday in New York and Toronto in the wake of the bankruptcy filing.

All last year, Nortel tried to get a handle on its dire financial situation, including several rounds of layoffs, attempts to sell its Metro Ethernet unit and a WiMax deal with Alvarion, but so far nothing seems to have helped.

"In some sense it's not a complete surprise. Nortel has been struggling because of its heavy exposure to CDMA combined with the overall downturn," said Mike Roberts, principal analyst at Informa Telecoms & Media, referring to the company's heavy investment in Code Division Multiple Access technology.

Nortel has also never quite recovered from a financial meltdown around 2000, according to Roberts.

Many telecom vendors are struggling. Alcatel-Lucent is also having a hard time, but it has more scale in the infrastructure segment than Nortel and leads in some markets, Roberts said.

Just as Alcatel and Lucent merged, that option is one possibility for Nortel, but how that might play out is hard to guess, according to Roberts.

"There have always deals that have been worked on and kicked around involving Nortel," said Roberts.

Part of Nortel's business was linked with Huawei Technologies, and there have been rumors regarding Nortel and Motorola's network units pairing up, but that hasn't transpired, according to Roberts.

Nortel hired lawyers late last year to consider filing for bankruptcy, but announced in December that it would stick with a cost-cutting plan laid out in November. However, financial analyst Nikos Theodosopoulos of USB soon after in December said that a bankruptcy filing early this year could be the best plan for Nortel to pursue.

Join the PC World newsletter!

Error: Please check your email address.

Tags nortelbankruptcy

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Mikael Ricknäs

IDG News Service
Show Comments

Essentials

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?