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 newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags AvayanortelEricssonradwarebay networksmetro EthernetCiena

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

Jim Duffy

Network World
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?