Nortel in '09: Dismantling of a tech stalwart

We take a look at the business decisions which pulled down the networking behemoth

This year saw the slow, painful dismantling of Nortel. Its gradual exit from the tech scene played out the entire year, as each month brought news of more layoffs, markdowns or sell-offs.

The story began in January, when Nortel filed for Chapter 11 bankruptcy in an effort to stem a financial free fall brought on by the perfect storm of the global economic crisis, little demand for product, the ripple effect of a previous accounting scandal and strategic missteps.

Then the company began small-scale divestitures that would ultimately lead to a more significant dismantling of operations. It exited the mobile WiMAX business by ending an alliance with Alvarion (Nortel had previously targeted WiMAX as a strategic growth business for the company going forward).

In February, Nortel claimed it was still signing up new customers in light of the bankruptcy filing. But later that month, the company ditched its shareholders meeting, laid off thousands more employees, and then sold its application switch business to Radware for a mere fraction of what it paid when it bought Alteon in 2000.

The deal with Radware was but an appetizer for a much more significant dissolution of company assets and operations. In March, word leaked that Nortel was looking to sell off more assets and businesses as part of its sweeping restructuring under bankruptcy. Also that month, Nortel wound down its investment in the Carrier Ethernet switch and router market and canceled its block of rooms at the CTIA convention in Las Vegas.

In April, reports surfaced that Nortel was also looking to sell off its stake in a joint venture with LG, the Korean electronics giant. The venture was started in 2005 and had about $US1 billion in revenue in 2008.

In May, Nortel tried to deflect attention from its unraveling operations by announcing a core data center switch, the VSP 9000, at Interop. But at Interop, enterprise chief Joel Hackney admitted that customers had "hit the pause button" on purchasing and placing orders for Nortel products in light of the company's fading fortunes.

The next month revealed that some former Nortel executives were looking to acquire the company in an effort to keep it the top investor in R&D in Canada. That deal never materialized, but others did -- Nortel announced that it was selling its CDMA and LTE wireless businesses, and confirmed speculation from previous months that it is seeking buyers for the rest of the company's operations. Nortel was officially leaving the scene after admitting that it was unable to complete its restructuring plan.

Later in June, reports surfaced that Avaya was offering $US500 million for Nortel's enterprise business, and that Nortel was laying off executives spearheading its unified communications alliance with Microsoft. But the writing was already on the wall for that partnership -- Microsoft got cozy with HP in May to effectively replace Nortel as a strategic UC ally.

Join the PC World newsletter!

Error: Please check your email address.

Tags Ericssonnortelmetro EthernetCienabay networksradwareAvaya

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.

Jim Duffy

Network World
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

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

Learn more >

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

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

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?