“We only filed for credit protection. We are not bankrupt and have sufficient funds to run our business. This is a voluntary move that will allow us time to leverage the tools that are available under Chapter 11 which will enable us to reorganize our business,” says Anthony McLachlan, vice president for carrier sales of Nortel.
McLachlan explained that their recent move began three years ago when they went into business transformation process by dropping down the operational cost of their business to make sure that they have the right focus across their portfolio; invest on emerging technologies from a research and development point of view; and gain the right mix between growth and mature portfolio elements (as far as investment is concerned).
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“As a company, our clients recognize that we offer good technology products; but as a business, we are not immune to the economic conditions–as our customers contract their capital expenses, our business will feel the impact. As a consequence of that, it created certain exposure with some legacy items we have with our own balance sheet, so we had to make some hard decisions,” cites McLachlan.
The filing, according to McLachlan, is not a last measure but a deliberate action to reorganize their business and address their legacy balance amounting to $4 billion.
“However, our filing did not include Asia (which is predominantly concentrated with sales, distribution and R&D), so we continue to engage with our customers, provide the same level of 24/7 support, technology innovation, and product supply (with the help of our partners).”
Under Chapter 11, upon filing and approval, Nortel will be given 120 days to submit a restructuring plan, which McLachlan foresees will be implemented during their first quarter cycle. Depending on the organization, typically it takes around three to six months or 12 to 18 months to fully deploy the reorganization process but Nortel is bent to move as fast as they can.
McLachlan notes, “We are in the process of reaching out to all our clients, providing regular updates on what we are doing, how we are doing it and why we are doing it, so that they would fully understand how we plan to continue to go forward.”
As for its local presence in the country, Laura Lariosa, account director of Nortel says that their core team is still intact and it is business as usual for them, as they continue to provide products and solutions ranging from carrier voice, transmission, LAN switches to unified communication (UC) and voice over IP (VOIP).
“We try to focus our portfolio in areas such as 4G technology, 40G platform, UC, and VOIP, where we can differentiate ourselves in the marketplace to gain leadership position, and we will continue to do so while we work on increasing our communication efforts with our clients and partners to show transparency,” adds McLachlan.