NT Nortel Networks Files for Bankruptcy

Telecom giant Nortel Networks (NT) filed for Chapter 11 bankruptcy protection in Delaware today.

This is sad for me. NT was one of our major customers for fiber optics products designed and manufactured by my group at Hewlett-Packard (HPQ - charts) before I left HP in 1998 to write about investing and build web sites while living off my investments to fund my work.

At NTs peak during the tech bubble of 2000, Nortel reported about $30 billion of annual revenue and employed nearly 93,000 employees. Since then, Nortel lost out to Cisco and Juniper Networks Inc., whose products enabled telephone companies to transmit phone signals over Internet lines.

Here is a short history of NT from Reuters:

• Sept 1998 -- Company changes name to Nortel Networks from Northern Telecom underlining its shift toward data and multimedia networking from telecommunications
• May 1, 2000 -- BCE Inc (BCE.TO), Canada's biggest telecommunications group, completes spinoff to shareholders of 35 percent stake in Nortel, worth about C$88.5 billion ($75.6 billion)
• July, 2000 -- Nortel shares reach a high of C$124.50, or more than C$1,100 each if adjusted for a stock consolidation that took place in late 2006, giving it a market cap of more than $250 billion.
• Oct. 24, 2000: Stock drops about 20 percent after company misses revenue target.
• Feb. 15, 2001 - Nortel cuts 2001 earnings and sales forecast in half, blaming severe erosion in U.S. economic conditions. The warning triggers a 33 percent drop in its stock and brings class-action lawsuits.
• May 29, 2002 - Nortel plans to cut 3,500 jobs and sell more assets as it pares its revenue forecast.
• June 4 - Nortel shares collapse to decade-long lows on concerns a new financing will further dilute its stock. Cash-hungry Nortel raises $1.49 billion June 7.
• Oct. 23, 2003 - Nortel reports a quarterly profit, but says it will restate results going back to 2000.
• March 15, 2004 - Nortel says it will likely restate results for a second time and delay filing its annual report.
• April 5 - The U.S. Securities and Exchange Commission launches a formal investigation into Nortel's accounting
• June 29 - Nortel exits manufacturing business, sells plants to Flextronics International, transfers 2,500 staff.
• Sept. 30 - Nortel cuts almost 10 percent of its staff, 3,250 jobs, and vacates offices worldwide.
• Jan. 11, 2005 - Nortel restates its results and says 12 senior executives will repay $8.6 million of bonuses.
• Oct. 17 - Motorola's No. 2 executive, Mike Zafirovski, is appointed CEO, promising renewed growth and focus.
• Feb. 8, 2006 - Nortel says it will pay $2.47 billion to settle two class-action suits from its accounting scandal.
• Feb. 7, 2007 - Nortel slashes 3,900 jobs and shifts 1,000 positions to lower-cost locations such as China and India.
• Oct. 15 - Nortel pays $35 million to settle civil charges filed by the SEC related to its accounting scandal.
• Feb. 27, 2008 - Nortel says it will cut 2,100 jobs as it faces persistently slow demand for its products.
• Sept. 17, 2008 - Nortel cuts revenue forecast, plans another round of restructuring and the sale of its Metro Ethernet Networks business. It says it may also look for a partner to develop fourth-generation wireless technology.
• Nov. 10 - Nortel announces 1,300 layoffs, a freeze on salary increases and a review of its real-estate portfolio after posting a $3.4 billion quarterly loss.
• Jan. 14, 2009 - Nortel files for Chapter 11 bankruptcy protection in the United States

Nortel follows Lucent as a major failure. The combined company, Alcatel/Lucent (ALU) has a stock prices that looks to be in poor shape also.


Will Alcatel-Lucent survive?

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