Wednesday, January 14, 2009

Nortel Bankrupt

So in news not wholly unexpected, my former employer Nortel lurched today into Chapter 11.

I was privileged to work in Bell-Northern Research, and then Nortel in the glory years of the 1990s. It was the largest hi-tech company in Canada and recruited the best of that country's idealistic graduates. BNR was the original "Don't Be Evil" company.

The turning point came, I was told, as the Internet boom came to its peak in 2000/1 - after I had left the company to set up my consultancy. They recruited a new set of top managers with no buy-in at all to the old BNR/Northern Telecom culture, values or idealism. It was get rich quick and enjoy the perks. The results were seen in the criminal prosecutions a few years later.

In the more recent past, Nortel tried to get back to its roots. But if companies the size of Lucent and Alcatel were merging to achieve economies of scale, and finding that difficult, the prospects for a reduced Nortel always looked dire. Telecoms equipment manufacture, like few other industries, rewards scale. Even as Nortel tried to shed its most profitable divisions to maintain cashflow, it failed to find buyers.

I doubt there is any organic future for a stand-alone Nortel, so it will come down to a fire-sale.

I should declare an interest. A substantial part of my retirement income should be coming through my Nortel pension, which, when we last looked, was not entirely fully-funded.