Nortel the first big casualty of the crippling economy

From published reports this morning Nortel Network, formerly Northern Telecom, has filed for bankruptcy protection in the U.S. (Delaware). It is expected Nortel will do the same in Canada.

The word on the street is that this company will eventually be broken up and sold piece by piece to non-Canadian companies at bargain basement prices.

So that is it for Nortel Networks. Customers and channel partners will now have to wait to see what happens. Channel partners can at least move onto other vendors. Customers will need service and support and who knows where that will come from. You can forget about Cisco Systems coming to the rescue. I would be shocked to see Cisco be one of those buyers. Cisco CEO John Chambers told CDN on a few occasions that Cisco does not acquire competing companies or technology. Nortel has quality technology solutions. About four years’ ago Chambers all but acknowledged that when he tried to create some kind of alliance or partnership with Nortel only to be rebuffed.

I sincerely hope that current CEO Mike Zafirovski can pull out a miracle, but it is doubtful. I do not necessarily blame him for this mess. I think carpet bagging CEOs such as John Roth and Frank Dunn are the real orchestraters of Nortel’s immanent demise.

Certainly none of these men are Jean Monty.

But this is not the same company that was founded in Brampton, Ont., more than 100 years ago. At one point during the peak of the tech bubble Nortel was inching close to 100,000 worldwide employees and a valuation better than all of the major Canadian banks combined. That is saying something, the majority of those employees were not-Canadian; nor were they based here. It was a great Canadian success story, but during that time it also lost its Canadian identity. I will never forget a Nortel PR person from Richardson, Tex., saying to me, in a very thick southern drawl, how proud she was of the company’s Brampton, Ont., roots.

Today, Nortel has less than 26,000 employees after another round of massive layoffs.

This is a sad day for Canada and a sad day for the Canadian ICT industry. I would like to think that Prime Minister Stephen Harper will bail Nortel out, but don’t count on it. Nortel will be remembered as the first big casualty of the 2008/09 recession.

So this is how it ends for Nortel. Today will be its big bang, but over the coming months they will wither away.

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Jim Love, Chief Content Officer, IT World Canada
Paolo Del Nibletto
Paolo Del Nibletto
Editor of Computer Dealer News, covering Canada's IT channel community.

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