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- Nortel Seeks Bankruptcy Protection
- Monty Solomon
January 16, 2009, 1:20 pm
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Nortel Seeks Bankruptcy Protection
By IAN AUSTEN
The New York Times
January 15, 2009
OTTAWA - Nortel Networks, the Canadian telecom equipment maker, filed
for bankruptcy protection from creditors Wednesday but analysts said
its troubles might be too severe for it to recover and survive.
Unlike other companies, notably airlines, that have used bankruptcy
protection to renew their businesses, Nortel, which began this decade
as one of the world's largest makers of telecommunications equipment,
is probably headed for liquidation, several analysts said.
"I don't think it's going to exist," said Mark Sue, an analyst with
RBC Capital Markets, a unit of the Royal Bank of Canada.
If Mr. Sue and others are correct, the end of Nortel would be one of
largest failures in the telecommunications equipment business. During
the 1990s, Nortel designed and built much of the fiber optic
equipment that now carries most of the Internet's data.
Along with the company now known as Alcatel Lucent, it computerized
the operation of telephone networks during the 1980s. Nortel
pioneered the development of equipment and software that brought the
world wireless phone networks.
Nortel's demise would also be among the biggest business failures in
Canadian history. During the zenith of the technology boom, Nortel's
market value accounted for about a third of all equity traded on the
Toronto Stock Exchange.
Nortel's shares peaked at 124.50 Canadian dollars in July 2000 in
trading on the Toronto Stock Exchange. On Wednesday, Nortel closed at
a market price of 12 Canadian cents, or 1.2 cents after adjusting for
a stock consolidation. While the current economic slump contributed
to Nortel's decision to file for protection in both Delaware and its
hometown, Toronto, the company's problems began in 2001, when it was
hit by the technology stock price collapse and became mired in an
accounting scandal that led to criminal charges against three of its
Re: Nortel Seeks Bankruptcy Protection [Telecom]
past 10 years and the bad management, I [would] be surprised if Nortel
hadn't gone bankruptcy.
Some say Nortel is a corporation run like a government -
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