One year ago, Nortel Networks Corp. filed for bankruptcy protection in Canada, the U.S. and other countries in which it operates.
Toronto-based Nortel, founded in 1895 as the manufacturing unit of what is now Bell Canada Enterprises (BCE) Inc., made everything from telegraph switchboards to kitchen appliances. It started running into trouble in 1998, though it seemed to take most investors a few years to clue in. In 1997, it made a profit of US$829 million on revenues of US$15.449 billion. Although revenues peaked at US$27.9 billion in 2000, its net earnings were negative 10 of the past 11 years. Canadian and U.S. courts gave Nortel protection from creditor claims shortly before an interest payment was due in January, 2009.
Some troubled companies turn over all their assets to their creditors, effectively turning the bondholders into shareholders. Others buy time and start repaying debt later on. Nortel decided to sell off all its assets in order to pay its bondholders.
Ericsson wins auction for CDMA
It started with the carrier wireless unit that makes code division multiple access (CDMA) equipment and holds Long Term Evolution (LTE) patents. For US$1.13 billion, Telefonaktiebolaget LM Ericsson acquired Nortel’s wireless units and hired 1,600 former Nortel workers, about 900 of whom work in Canada.
That deal was controversial.
Last July, Research in Motion Inc. complained to the federal government that it was effectively blocked from bidding for those assets, and warned if they landed in foreign hands it could harm “national interests.”
Why RIM claimed Nortel’s LTE patents affect national security
Initial reaction from Info-Tech’s Mark Tauschek