Nortel Bankruptcy

When I surfed in Bloomberg, I read this quite shocking news. Below is the excerpt.

Nortel, North America’s biggest maker of telephone equipment, in business for 113 years, filed for bankruptcy protection today, capping one of the greatest corporate collapses in Canadian history. The stock fell 69 percent to 12 cents by 4:15 p.m. in trading today on the Toronto Stock Exchange, for a market value of C$60 million ($48 million).

Nortel’s decision, following the takeovers of Canadian firms such as aluminum maker Alcan Inc. and miner Falconbridge Ltd., means another Canada-based global leader is about to disappear. Now the Canadians only have two world leaders: Research in Motion (maker of Blackberry), and the plane and trainmaker Bombardier Inc.

At its peak in 2000, Nortel had annual revenue of $28 billion and employed about 93,000 people in more than 150 countries. The stock traded as high as C$1,245, adjusting for stock splits, for a market value of C$366 billion, making it the biggest company in Canada. The shares quadrupled in 1999 on expectations the Toronto-based phone equipment maker would benefit from the surge in demand for Internet-based technology. Nortel was a great Canadian company, it employed a lot of people and it was an important part of the economic structure of Canada. The company employs almost 6,000 people in Canada, among its global staffs of 30,000.

Investors blame Nortel management for overpaying for transactions such as the $6.9 billion purchase of Bay Networks Inc. in 1999 and the $5.7 billion acquisition of Alteon Websystems Inc. a year later.

According to a fund manager, the quality of management is what did them in. They went on an acquisition spree during the Internet bubble but they paid over the top for assets and never managed to get rid of the debt.

It’s too bad to see the big guys are falling down, because these are the real movers of economy.

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1. Finally Woken says:

   January 15, 2009 at 4:34 pm

   Nortel has been suffering quite a long time in Indonesia. I remember 5-6 years a go we still built their office in Kuningan. In 2007 when I changed jobs we couldn’t even get Nortel people to come to our office to present their products. One of the biggest telco providers gave me an insight about Nortel situation so I’m not surprised now they went bust.

   Reply
2. boy says:

   January 15, 2009 at 9:40 pm

   yep, too bad that they were great

   Reply
3. Devi Girsang says:

   January 17, 2009 at 1:00 pm

   Hmm pardon me but I didn’t know anything about Nortel. Maybe I’m just not into the nation’s economy

   Reply
4. boy says:

   January 18, 2009 at 6:32 pm

   numpang lewat silahkan

   Reply
5. Devi Girsang says:

   January 19, 2009 at 1:07 am

   Haha, mestinya ga usah komen ya klo ga tau apa2?

   Reply
6. boy says:

   January 19, 2009 at 9:24 am

   haha..gak lah. asyik asyik aja

   Reply