Nortel files for Chapter 11 bankruptcy protection

Author: Gareth Halfacree
Published: 15th January 2009
Comments (6) Stumble
Nortel files for Chapter 11 bankruptcy protection

Nortel Networks is facing delisting from the stock exchange and has filed for Chapter 11 protection in the face of mounting debt.

The harsh financial conditions continue to take their toll on the tech sector, with telecommunications specialist Nortel Networks filing for Chapter 11 bankruptcy protection.

According to news published by CNet yesterday, the company has been struggling financially since the last economic downturn in 2001, with management recently having had to put large amounts of the company's assets up for sale to raise cash to cover debt repayments.

The company – which was once counted among the world's leading telecommunications equipment manufacturers, with equipment found in the racks of major networking sites the world over – is facing a massive bond debt of around $3.8 billion, which is bad news in the face of a global slowdown in spending. With only $2.6 billion in cash to fall back on, the company is unable to clear the debt – and faces massive interest payments.

The news gets worse for Nortel, with the New York Stock Exchange threatening to delist the company if shares don't rise above a $1 minimum; currently, Nortel shares are at a poor 32 cents and don't look likely to climb higher any time soon.

If the company is forced into Chapter 11 bankruptcy proceedings, it's likely that it will be broken into individual business units and sold on – which would spell the end for Nortel.

Does Nortel deserve to continue, or has it always been a provider of too-specialised equipment that never learned to diversify? Share your thoughts over in the forums.
Quote liratheal 15th January 2009, 09:29
Buy buy buy!

Good old economic downturn. :/
Quote TomH 15th January 2009, 10:31
To be fair, they deserve it. Their absolute bottom basic BCM system (a PBX) is £1000. You get two cheap, nasty, digital phones (not VoIP) with it for free. Wow.

£1000. And they expect you to pay extra to buy licenses for SIP trunking, VoIP, more seats... I remember looking at the prices of some of their bits and pieces.. You think Cisco charging £300+ for a 256MB CF card was nuts? Nortel completely eclipse that.

So no wonder they're going under.
Quote Teq 15th January 2009, 10:52
I used to work for these guys and they were struggling a bit back then, hopefully they will recover but things aren't looking so good :(
Quote rewind 15th January 2009, 14:31
I don't know Nortel very well but we've got a BCM in the office and we really like it, much better than our old system (which was also Nortel) We've got IP phones and I don't know about the licences but it's linked into Outlook and we can send texts around the office to each others PC's and see on your PC who's on the phone before you dial.

I'm more of a data guy and have used their switches in the past, they were good reliable boxes. I hate to loose any big IT vendor at the moment, it just weakens the industry more. I hope they pull through.
Quote notatoad 15th January 2009, 18:36
i didn'te even realize nortel still existed until i saw this on CBC yesterday. i thought they had already gone under in the .com bust when their stock was worth pennies.
Quote n3mo 15th January 2009, 22:06
I still have a whole pile of BayStacks, they are dirt cheap now. But their licensing system and pricing was indeed crazy.
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