Nortel Networks Corporation (Nortel), formerly Northern Telecom Limited, was a Canadian
multinational telecommunications
Telecommunication is the transmission of information by various types of technologies over wire, radio, optical, or other electromagnetic systems. It has its origin in the desire of humans for communication over a distance greater than that ...
and data
networking equipment manufacturer headquartered in
Ottawa
Ottawa (, ; Canadian French: ) is the capital city of Canada. It is located at the confluence of the Ottawa River and the Rideau River in the southern portion of the province of Ontario. Ottawa borders Gatineau, Quebec, and forms the c ...
,
Ontario
Ontario ( ; ) is one of the thirteen provinces and territories of Canada.Ontario is located in the geographic eastern half of Canada, but it has historically and politically been considered to be part of Central Canada. Located in Central Ca ...
, Canada. It was founded in
Montreal
Montreal ( ; officially Montréal, ) is the second-most populous city in Canada and most populous city in the Canadian province of Quebec. Founded in 1642 as '' Ville-Marie'', or "City of Mary", it is named after Mount Royal, the triple- ...
,
Quebec
Quebec ( ; )According to the Canadian government, ''Québec'' (with the acute accent) is the official name in Canadian French and ''Quebec'' (without the accent) is the province's official name in Canadian English is one of the thirte ...
, in 1895 as the Northern Electric and Manufacturing Company. Until an
antitrust
Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust ...
settlement in 1949, Northern Electric was owned principally by
Bell Canada
Bell Canada (commonly referred to as Bell) is a Canadian telecommunications company headquartered at 1 Carrefour Alexander-Graham-Bell in the borough of Verdun in Montreal, Quebec, Canada. It is an ILEC (incumbent local exchange carrier) in ...
and the
Western Electric Company
The Western Electric Company was an American electrical engineering and manufacturing company officially founded in 1869. A wholly owned subsidiary of American Telephone & Telegraph for most of its lifespan, it served as the primary equipment ...
of the
Bell System
The Bell System was a system of telecommunication companies, led by the Bell Telephone Company and later by the American Telephone and Telegraph Company (AT&T), that dominated the telephone services industry in North America for over one hundr ...
, producing large volumes of telecommunication equipment based on licensed Western Electric designs.
At its height, Nortel accounted for more than a third of the total valuation of all companies listed on the
Toronto Stock Exchange
The Toronto Stock Exchange (TSX; french: Bourse de Toronto) is a stock exchange located in Toronto, Ontario, Canada. It is the 10th largest exchange in the world and the third largest in North America based on market capitalization. Based in the ...
(TSX), employing 94,500 people worldwide.
In 2009, Nortel filed for bankruptcy protection in Canada and the United States, triggering a 79% decline of its corporate stock price. The bankruptcy case was the
largest in Canadian history and left pensioners, shareholders and former employees with enormous losses. By 2016, Nortel had sold billions of dollars in assets.
Courts in the U.S. and Canada approved a negotiated settlement of bankruptcy proceedings in 2017.
History
Origins
Alexander Graham Bell
Alexander Graham Bell (, born Alexander Bell; March 3, 1847 – August 2, 1922) was a Scottish-born inventor, scientist and engineer who is credited with patenting the first practical telephone. He also co-founded the American Telephone and T ...
conceived the technical aspects of the telephone and invented it in July 1874, while residing with his parents at their farm in Tutela Heights,
[Patten, William; Bell, Alexander Melville]
Pioneering The Telephone In Canada
, Montreal: Herald Press, 1926. (Note: Patten's full name was William Patten, not Gulielmus Patten as credited elsewhere) on the outskirts of
Brantford, Ontario
Brantford ( 2021 population: 104,688) is a city in Ontario, Canada, founded on the Grand River in Southwestern Ontario. It is surrounded by Brant County, but is politically separate with a municipal government of its own that is fully independe ...
. He later refined its design at Brantford after producing his first working prototype in Boston. Canada's first telephone factory, created by James Cowherd of Brantford, was a three-story brick building that soon started manufacturing telephones for the
Bell System
The Bell System was a system of telecommunication companies, led by the Bell Telephone Company and later by the American Telephone and Telegraph Company (AT&T), that dominated the telephone services industry in North America for over one hundr ...
, leading to the city's style as ''The Telephone City''.
After Cowherd's death in 1881 which resulted in the closure of his Brantford factory, a mechanical production department was created within the
Bell Telephone Company of Canada and production of Canadian telephone equipment was transferred to Montreal in 1882,
to compensate the restrictions on importing telephone equipment from the United States. In addition to telephones, four years later, the department started manufacturing switchboards, at first the 50-line Standard Magneto Switchboard.
The small manufacturing department expanded yearly with the growth and popularity of the telephone to 50 employees in 1888. By 1890 it had been transformed into its own branch of operations with 200 employees, and a new factory was under construction.
As the manufacturing branch expanded, its production ability increased beyond the demand for telephones, and it faced closure for several months a year without manufacturing other products. The Bell Telephone Company of Canada's (later renamed to Bell Canada) charter prohibited the company to build other products. In 1895, the Bell Telephone of Canada spun off its manufacturing arm to build telephones for sale to other companies, as well as other products, such as
fire alarm
A fire alarm system warns people when smoke, fire, carbon monoxide or other fire-related or general notification emergency, emergencies are detected. These alarms may be activated automatically from smoke detectors and heat detectors or may also ...
boxes,
police street call boxes, and
fire department call equipment. This company was incorporated as the Northern Electric and Manufacturing Company Limited.
Northern Electric and Manufacturing Company
Northern Electric and Manufacturing Company Limited were incorporated on December 7, 1895. The initial stock capital was $50,000 at $100 per share, with 93% held by the Bell Telephone Company of Canada and the remainder held by seven corporate directors.
The first general stockholders meeting was held on March 24, 1896.
In December 1899, The Bell Telephone Company of Canada bought a cabling company for $500,000; a Canadian charter named it ''The Wire and Cable Company''. Northern Electric and Manufacturing further expanded its product line in 1900, manufacturing the first Canadian wind-up
gramophones that played
flat discs.
In 1911 the Wire and Cable company changed its name to the ''Imperial Wire and Cable Company''.
Northern Electric Company
The construction of a new manufacturing plant started in 1913 at Shearer Street in Montreal, Quebec, Canada, as preparations began for the two manufacturing companies' integration. Then, in January 1914, the Northern Electric and Manufacturing Company and the Imperial Wire and Cable Company merged into the ''Northern Electric Company'', commonly known simply as Northern Electric. The new company opened the doors on a new manufacturing plant in January 1915. This facility, located on Shearer Street, was the primary manufacturing centre until the mid-1950s.
Edward Fleetford Sise Edward Fleetford Sise (1877 - 1943) Canadian business man, First President of Northern Electric Company (now called Nortel) 1914 - 1919).
See also
* Charles Fleetford Sise Sr.
* Charles Fleetford Sise Jr.
* Paul Fleetford Sise
References
Ext ...
was the president and his brother
Paul Fleetford Sise
Paul Fleetford Sise (November 10, 1879 – August 1, 1951) Canadian businessman, President of Northern Electric ( Nortel 1919 - 1948). graduated from McGill University in 1901 and was an adjutant to the 148th Battalion, CEF, from Montreal.
See ...
was the vice-president and general manager.
During the
First World War
World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was List of wars and anthropogenic disasters by death toll, one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, ...
Northern Electric manufactured the
Portable Commutator, a one-wire telegraphic switchboard for military operations in the field. In 1922, Northern started to produce, for $5, the "Peanut" vacuum tube, which required only a single dry-cell battery. The use of alternating current was still under development during this time. The "Northern Electric Peanut tube was the smallest tube made, and drew only one-tenth of an ampere and was the most remarkable radio frequency amplifier ever made." During the 1920s Northern Electric made
kettle
A kettle, sometimes called a tea kettle or teakettle, is a type of pot specialized for boiling water, commonly with a ''lid'', ''spout'', and ''handle'', or a small electric kitchen appliance of similar shape that functions in a self-contained ...
s,
toaster
A toaster is a small electric appliance that uses radiant heat to brown sliced bread into toast.
Types
Pop-up toaster
In pop-up or automatic toasters, a single vertical piece of bread is dropped into a slot on the top of the toaste ...
s,
cigar
A cigar is a rolled bundle of dried and fermented tobacco leaves made to be smoked. Cigars are produced in a variety of sizes and shapes. Since the 20th century, almost all cigars are made of three distinct components: the filler, the binder l ...
lighters, electric
stove
A stove or range is a device that burns fuel or uses electricity to generate heat inside or on top of the apparatus, to be used for general warming or cooking. It has evolved highly over time, with cast-iron and induction versions being develope ...
s, and
washing machine
A washing machine (laundry machine, clothes washer, washer, or simply wash) is a home appliance used to wash laundry. The term is mostly applied to machines that use water as opposed to dry cleaning (which uses alternative cleaning fluids and ...
s.
In January 1923, Northern Electric started to operate an AM radio station with call letters
CHYC, in the Shearer Street plant, and much of the programming was religious services for the Northern Electric employees and families in the community. In July 1923, CHYC-AM was the first radio station to provide entertainment to the riders of the
transcontinental train, in a parlor car fitted with a radio set to receive the broadcast as it left Montreal and traveled west. Later in the 1920s, Northern created the first
talking movie sound system in the
British Empire
The British Empire was composed of the dominions, colonies, protectorates, mandates, and other territories ruled or administered by the United Kingdom and its predecessor states. It began with the overseas possessions and trading posts e ...
for a theater in Montreal.
[
]
During the
Great Depression
The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
in the 1930s, Northern Electric was affected, like most other companies. From the beginning of 1930 through the end of 1933, sales dropped from $34 million to $8.2 million, with employees dropping from 6,100 to 2,400.
Independence from Western Electric
In 1949, an
antitrust
Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust ...
suit in the U.S. forced
AT&T
AT&T Inc. is an American multinational telecommunications holding company headquartered at Whitacre Tower in Downtown Dallas, Texas. It is the world's largest telecommunications company by revenue and the third largest provider of mobile ...
/
Western Electric
The Western Electric Company was an American electrical engineering and manufacturing company officially founded in 1869. A wholly owned subsidiary of American Telephone & Telegraph for most of its lifespan, it served as the primary equipment ma ...
to sell its stake in Northern Electric to Bell Canada. AT&T spun off Northern Electric in 1956. Deprived of its Western Electric tie, Northern began developing its own products. In 1953, Northern Electric produced its first television sets using
tubes made by
RCA
The RCA Corporation was a major American electronics company, which was founded as the Radio Corporation of America in 1919. It was initially a patent trust owned by General Electric (GE), Westinghouse, AT&T Corporation and United Fruit Comp ...
.
Bell Canada acquired 100 percent of Northern Electric in 1964; through public stock offerings starting in 1973, Bell's ownership of Northern Electric and its successors would be reduced, though it continued to have majority control.
In 1966, the Northern Electric research lab, Northern Electric Laboratories (the predecessor to
Bell-Northern Research
Bell-Northern Research (BNR) was a telecommunications research and development company established In 1971 when Bell Canada and Northern Electric combined their R&D organizations. It was jointly owned by Bell Canada and Northern Telecom. BNR w ...
), started looking into the possibilities of
fiber optic cable
A fiber-optic cable, also known as an optical-fiber cable, is an assembly similar to an electrical cable, but containing one or more optical fibers that are used to carry light. The optical fiber elements are typically individually coated with ...
, and in 1969, began work on digitizing telephone communications. Also in 1969, Northern began making inroads into the U.S. market with its switching systems. In 1972, it opened its first factory in the U.S. in
Michigan
Michigan () is a state in the Great Lakes region of the upper Midwestern United States. With a population of nearly 10.12 million and an area of nearly , Michigan is the 10th-largest state by population, the 11th-largest by area, and t ...
. In the late 1960s and early 1970s, Northern began shipping its first
digital switching systems, one of the earliest such systems to be sold.
Northern Telecom was, with Bell-Northern Research, in the early 1970s a part owner of
MicroSystems International, a semiconductor manufacturer based in Nepean, outside Ottawa.
Northern Telecom and "Digital World"
In March 1976, the company name was changed to Northern Telecom Limited, and management announced its intention to concentrate the company's efforts on digital technology. Northern Telecom was the first company in its industry to announce and to deliver a complete line of fully digital telecommunications products. The product line was branded "Digital World" and included the well known
DMS-100
The DMS-100 is a member of the Digital Multiplex System (DMS) product line of telephone exchange switches manufactured by Northern Telecom. Designed during the 1970s and released in 1979, it can control 100,000 telephone lines.
The purpose of t ...
, a fully digital central office switch serving as many as 100,000 lines, which was a key contributor to the company's revenue for close to 15 years.
Starting in 1977, Nortel grew rapidly after the introduction of its DMS line of digital central office telephone switches, especially after the
AT&T
AT&T Inc. is an American multinational telecommunications holding company headquartered at Whitacre Tower in Downtown Dallas, Texas. It is the world's largest telecommunications company by revenue and the third largest provider of mobile ...
breakup in 1984. Northern Telecom became a significant supplier in Europe and China and was the first non-Japanese supplier to
Nippon Telegraph and Telephone
, commonly known as NTT, is a Japanese telecommunications company headquartered in Tokyo, Japan. Ranked 55th in ''Fortune'' Global 500, NTT is the fourth largest telecommunications company in the world in terms of revenue, as well as the third la ...
.
Deregulation
In 1983, due to deregulation, Bell Canada Enterprises (later shortened to
BCE) was formed as the parent company to
Bell Canada
Bell Canada (commonly referred to as Bell) is a Canadian telecommunications company headquartered at 1 Carrefour Alexander-Graham-Bell in the borough of Verdun in Montreal, Quebec, Canada. It is an ILEC (incumbent local exchange carrier) in ...
and Northern Telecom.
Bell-Northern Research
Bell-Northern Research (BNR) was a telecommunications research and development company established In 1971 when Bell Canada and Northern Electric combined their R&D organizations. It was jointly owned by Bell Canada and Northern Telecom. BNR w ...
was jointly owned 50–50 by Bell Canada and Northern Telecom. The combined three companies were referred to as the tricorporate.
As Nortel, the streamlined identity it adopted for its 100th anniversary in 1995, the company set out to dominate the burgeoning
global market
In economics, a market is a composition of systems, institutions, procedures, social relations or infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering ...
for
public
In public relations and communication science, publics are groups of individual people, and the public (a.k.a. the general public) is the totality of such groupings. This is a different concept to the sociology, sociological concept of the ''Öf ...
and private networks.
Optical boom and bust
In 1998, with the acquisition of
Bay Networks
Bay Networks was a network hardware vendor formed through the merger of Santa Clara, California based SynOptics Communications and Billerica, Massachusetts based Wellfleet Communications on July 6, 1994. SynOptics was an important early innov ...
, the company's name was changed to Nortel Networks to emphasize its ability to provide complete solutions for multiprotocol, multiservice, global networking over the
Internet
The Internet (or internet) is the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a '' network of networks'' that consists of private, p ...
and other communications networks. As a consequence of the stock transaction used to purchase Bay Networks, BCE ceased to be the majority shareholder of Nortel.
In 1999, Nortel outsourced several of its manufacturing operations to North American contractors.
In 2000, BCE
spun out Nortel, distributing its holdings of Nortel to its shareholders. Bell-Northern Research was gradually absorbed into Nortel, as it first acquired a majority share in BNR, and eventually acquired the entire company.
In the late 1990s, stock market
speculators, hoping that Nortel would reap increasingly lucrative profits from the sale of
fibre optic network
Fiber-optic communication is a method of transmitting information from one place to another by sending pulses of infrared light through an optical fiber. The light is a form of carrier wave that is modulated to carry information. Fiber is pref ...
gear, began pushing up the company's share price to unheard-of levels despite the company's repeated failure to turn a profit. Under the leadership of
chief executive officer
A chief executive officer (CEO), also known as a central executive officer (CEO), chief administrator officer (CAO) or just chief executive (CE), is one of a number of corporate executives charged with the management of an organization especiall ...
(CEO)
John Roth, sales of optical equipment had been robust in the late 1990s, but the market was soon saturated. When the speculative telecom
bubble of the late 1990s reached its pinnacle late in the year 2000, Nortel was to become one of the most spectacular casualties. Nortel's revenues would be dented by a saturated market and the failure of
WorldCom
MCI, Inc. (subsequently Worldcom and MCI WorldCom) was a telecommunications company. For a time, it was the second largest long-distance telephone company in the United States, after AT&T. Worldcom grew largely by acquiring other telecommunic ...
, which was a major customer.
At its height, Nortel accounted for more than a third of the total valuation of all the companies listed on the
Toronto Stock Exchange
The Toronto Stock Exchange (TSX; french: Bourse de Toronto) is a stock exchange located in Toronto, Ontario, Canada. It is the 10th largest exchange in the world and the third largest in North America based on market capitalization. Based in the ...
(TSX), employing 94,500 worldwide, with 25,900 in Canada alone.
Nortel's market capitalization fell from
C$398 billion in September 2000 to less than C$5 billion in August 2002, as Nortel's stock price plunged from C$124 to C$0.47. When Nortel's
stock crashed, it took with it a wide swath of Canadian investors and
pension fund
A pension fund, also known as a superannuation fund in some countries, is any plan, fund, or scheme which provides retirement income.
Pension funds typically have large amounts of money to invest and are the major investors in listed and priva ...
s and left 60,000 Nortel employees unemployed. Roth was criticized after it was revealed that he cashed in his own
stock option
In finance, an option is a contract which conveys to its owner, the ''holder'', the right, but not the obligation, to buy or sell a specific quantity of an underlying asset or instrument at a specified strike price on or before a specified d ...
s for a personal gain of C$135 million in 2000 alone.
CEO John Roth retired in 2001. His planned successor and
chief operating officer
A chief operating officer or chief operations officer, also called a COO, is one of the highest-ranking executive positions in an organization, composing part of the " C-suite". The COO is usually the second-in-command at the firm, especially if ...
(COO), Clarence Chandran, already on sick leave due to complications following his 1997 stabbing in Singapore,
decided to quit, however.
Chief financial officer
The chief financial officer (CFO) is an officer of a company or organization that is assigned the primary responsibility for managing the company's finances, including financial planning, management of financial risks, record-keeping, and fina ...
(CFO)
Frank Dunn
Frank A. Dunn is a Canadian business executive who was the chief executive officer of Nortel Networks. In 2007, the U.S. Securities and Exchange Commission filed civil fraud charges against him, and three former senior executives, in a wide-rangi ...
was eventually chosen as Roth's permanent replacement.
After the Internet bubble
Accounting restatements
Frank Dunn presided over a dramatic restructuring of Nortel, which included laying off two-thirds of its workforce (60,000 staff) and writedowns of nearly US$16 billion in 2001 alone. This had some initial perceived success in turning the company around, with an unexpected return to profitability reported in the first quarter of 2003. The black ink triggered a total of $70 million in bonuses to the top 43 managers, with $7.8 million going to Dunn alone, $3 million to chief financial officer Douglas Beatty, and $2 million to controller Michael Gollogly. Independent auditor
Deloitte & Touche advised audit committee chairman
John Cleghorn and board chairman
"Red" Wilson to look into the suspicious results, who promptly hired the law firm WilmerHale to vet the financial statements.
In late October 2003, Nortel announced that it intended to restate approximately $900 million of liabilities carried on its previously reported balance sheet as of June 30, 2003, following a comprehensive internal review of these liabilities. The company stated that the restatement's principal effects would be a reduction in previously reported net losses for 2000, 2001, and 2002 and an increase in shareholders' equity and net assets previously reported on its balance sheet. A dozen of the company's most senior executives returned $8.6 million of bonuses they were paid based on the erroneous accounting. Investigators ultimately found about $3 billion in revenue had been booked improperly in 1998, 1999, and 2000. More than $2 billion was moved into later years, about $750 million was pushed forward beyond 2003 and about $250 million was wiped away completely. The accounting scandal hurt both Nortel's reputation and finances, as Nortel spent an estimated US$400 million on outside auditors and management consultants to retrain staff.
To improve its liquidity, in 2003 Nortel arranged a US$750 million credit support facility with
Export Development Canada.
Walter Robinson of the
Canadian Taxpayers Federation denounced the line of credit, calling it "
corporate welfare at its worst."
On April 28, 2004 amidst the accounting scandal, three of Nortel's top lieutenants—Douglas Beatty, CEO Frank Dunn and Michael Gollogly—were fired for
financial mismanagement
Financial mismanagement is management that, deliberately or not, is handled in a way that can be characterized as "wrong, bad, careless, inefficient or incompetent" and that will reflect negatively upon the financial standing of a business or indiv ...
.
They were later charged with fraud by the
RCMP
The Royal Canadian Mounted Police (RCMP; french: Gendarmerie royale du Canada; french: GRC, label=none), commonly known in English as the Mounties (and colloquially in French as ) is the federal and national police service of Canada. As poli ...
.
The trial began on January 16, 2012,
ending with acquittals for all three.
The
United States Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against marke ...
(SEC) also filed charges against them and four vice-presidents for civil fraud.
On December 19, 2014, remaining civil charges from the
Ontario Securities Commission
The Ontario Securities Commission (OSC) is a regulatory agency which administers and enforces securities legislation in the Canadian province of Ontario. The OSC is an Ontario Crown agency which reports to the Ontario legislature through the ...
and SEC were simultaneously dropped.
Owens and Zafirovski
After Dunn's firing, retired United States Admiral
Bill Owens – at the time a member of the board of directors – was appointed interim CEO. Nortel Networks subsequently returned to using the Nortel name for branding purposes only (the official company name was not changed). Nortel acquired PEC Solutions, a provider of information technology and telecommunications services to various government agencies and departments, in June 2005 and renamed it
Nortel Government Solutions Incorporated (NGS).
LG Electronics
LG Electronics Inc. () is a South Korean multinational electronics company headquartered in Yeouido-dong, Seoul, South Korea. LG Electronics is a part of LG Corporation, the fourth largest '' chaebol'' in South Korea, and often considered ...
and Nortel formed a
joint venture
A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to acces ...
in August, with Nortel owning 50% plus one share, to offer telecom and networking solutions in the wireline, optical, wireless and enterprise areas for South Korean and global customers.
Peter W. Currie, previously the Chief Financial Officer (CFO) of the
Royal Bank of Canada
Royal Bank of Canada (RBC; french: Banque royale du Canada) is a Canadian multinational financial services company and the largest bank in Canada by market capitalization. The bank serves over 17 million clients and has more than 89,000 ...
, was named CFO of Nortel in 2005, having previously served as Northern Telecom's CFO in the 1990s. Gary Daichendt, the former Chief Operating Officer of
Cisco Systems
Cisco Systems, Inc., commonly known as Cisco, is an American-based multinational digital communications technology conglomerate corporation headquartered in San Jose, California. Cisco develops, manufactures, and sells networking hardware, ...
, was hired as president and COO, and was expected to succeed Owens as CEO. Shortly afterward, Daichendt appointed ex-Cisco
Chief Science Officer Gary Kunis as
Chief Technology Officer (CTO). Both Garys were concerned about the overall direction of Nortel, especially when compared to Cisco, their previous employer. Just three months later, Daichendt resigned after both his restructuring plan and his suggestion that Owens and Currie leave the company immediately were rejected by the board of directors. Kunis quit shortly thereafter. At the year's end, directors Lynton "Red" Wilson and John Cleghorn retired from the board.
In 2004 Nortel discovered that hackers they believed to be in China had free rein within the Nortel network for more than a decade before their collapse. The fall of Nortel coincided with the rise of
Huawei
Huawei Technologies Co., Ltd. ( ; ) is a Chinese multinational technology corporation headquartered in Shenzhen, Guangdong, China. It designs, develops, produces and sells telecommunications equipment, consumer electronics and various sma ...
.
Mike S. Zafirovski, who had served as president and CEO of
GE Lighting and then as
Motorola
Motorola, Inc. () was an American multinational telecommunications company based in Schaumburg, Illinois, United States. After having lost $4.3 billion from 2007 to 2009, the company split into two independent public companies, Motorola ...
President and COO, succeeded Owens as president and CEO on November 15, 2005.
Motorola filed a suit against Zafirovski's hiring, alleging that his new position would break the terms of the
non-disclosure agreement
A non-disclosure agreement (NDA) is a legal contract or part of a contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wis ...
he had signed. Nortel agreed to pay $11.5 million on his behalf to settle the lawsuit.
Nortel also paid out US$575 million and 629 million common shares in 2006 to settle a class-action lawsuit that accused the company of misleading investors about the company's health.
Currie stepped down as Executive Vice President and CFO in early 2007. In February 2007, Nortel announced its plans to reduce its workforce by 2,000 employees, and to transfer an additional 1,000 jobs to lower-cost job sites. The Securities and Exchange Commission filed civil fraud charges against Nortel for accounting fraud from 2000 to 2003; the fraud was allegedly to close gaps between its true performance, its internal targets and Wall Street expectations. Nortel settled the case, paying $35 million, which the Commission distributed to affected shareholders, and reported periodically to the commission on remedial measures to improve its financial accounting.
Nortel announced plans in February 2008 to eliminate 2,100 jobs, and to transfer another 1,000 jobs to lower-cost centres.
As part of the reductions, Nortel shut down its Calgary campus in 2009.
During its reporting of third quarter 2008 results, Nortel announced it would restructure into three vertically-integrated business units: Enterprise, Carrier Networks, and Metro Ethernet Networks. As part of the decentralization of its organization, four executive positions were eliminated, effective January 1, 2009: Chief Marketing Officer - Lauren Flaherty; Chief Technology Officer - John Roese; Global Services President - Dietmar Wendt; and Executive Vice President Global Sales - Bill Nelson. A net reduction of 1,300 jobs was also announced.
[
] As its stock price dropped below $1, the
New York Stock Exchange
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its liste ...
notified Nortel that it would be
delisted
In corporate finance, a listing refers to the company's shares being on the list (or board) of stock that are officially traded on a stock exchange. Some stock exchanges allow shares of a foreign company to be listed and may allow dual listing, su ...
if its common shares failed to rise above $1 per share within 6 months. Rumours continued to persist of Nortel's poor financial health, amid the
late 2000s recession
The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At t ...
, and its bids for government funds were turned down.
Liquidation
Protection from creditors
On January 14, 2009, Nortel filed for protection from creditors, in the United States under
Chapter 11 of the United States Bankruptcy Code, in Canada under the
Companies' Creditors Arrangement Act
The ''Companies' Creditors Arrangement Act'' (CCAA; french: Loi sur les arrangements avec les créanciers des compagnies) is a statute of the Parliament of Canada that allows insolvent corporations owing their creditors in excess of $5 million to ...
, and in the United Kingdom under the
Insolvency Act 1986
The Insolvency Act 1986c 45 is an Act of the Parliament of the United Kingdom that provides the legal platform for all matters relating to personal and corporate insolvency in the UK.
History
The Insolvency Act 1986 followed the publication and ...
.
Nortel was the first major technology company to seek bankruptcy protection in this
global downturn. Nortel had an interest payment of $107 million due the next day, approximately 4.6% of its cash reserves of approximately $2.3 billion.
[
] After the announcement, the share price fell more than 79% on the Toronto Stock Exchange. Export Development Canada agreed to provide up to C$30 million in short-term financing through its existing credit support facility with Nortel. The Canadian government resisted characterizing its position on Nortel as a bailout.
Nortel initially hoped to re-emerge from bankruptcy, implementing a retention bonus plan in an effort to retain its top executives during the restructuring period. These bonuses, totaling US$45 million, were targeted at 1,000 executive positions.
At the end of January 2009, Nortel announced that it would be discontinuing its
WiMAX
Worldwide Interoperability for Microwave Access (WiMAX) is a family of wireless broadband communication standards based on the IEEE 802.16 set of standards, which provide physical layer (PHY) and media access control (MAC) options.
The WiMAX ...
business and its agreement with
Alvarion.
[
] Nortel subsequently sold its Layer 4–7 application delivery business to Israeli technology firm
Radware for $18 million, after Radware had initially placed a
stalking horse bid A stalking horse offer, agreement, or bid is a bid for a bankrupt firm or its assets that is arranged in advance of an auction to act as an effective reserve bid. The intent is to maximize the value of its assets or avoid low bids, as part of (or be ...
.
[
] Nortel had acquired the application switch product line in October 2000 when it purchased Alteon WebSystems.
[
]
Wind-up
With the worsening recession and stock market decline deterring potential companies from bidding for Nortel's assets, and many of Nortel's major customers reconsidering their relationships with the restructuring company, in June Nortel announced that it no longer planned to emerge from bankruptcy protection, and would seek buyers for all of its business units.
After announcing it planned to sell off all of its assets, Nortel shares were delisted from the Toronto Stock Exchange on June 26, 2009 at a price of $0.185 per share, down from its high in 2000 when it comprised a third of the S&P/TSX composite index.
[
] Mike Zafirovski subsequently resigned in August, and Nortel's board of directors was reorganized with three members instead of nine.
Nortel handed out $14.2 million in cash compensation to seven executives in 2009. Nortel also paid out $1.4 million to 10 former and current directors, and paid $140 million to lawyers, pension, human resources and financial experts helping to oversee the company's bankruptcy proceedings.
Nokia Siemens Networks made a
stalking horse bid A stalking horse offer, agreement, or bid is a bid for a bankrupt firm or its assets that is arranged in advance of an auction to act as an effective reserve bid. The intent is to maximize the value of its assets or avoid low bids, as part of (or be ...
to purchase Nortel's
CDMA
Code-division multiple access (CDMA) is a channel access method used by various radio communication technologies. CDMA is an example of multiple access, where several transmitters can send information simultaneously over a single communicatio ...
and
LTE assets for $650 million.
By the July 21 deadline for additional bids,
MatlinPatterson and
Ericsson
(lit. "Telephone Stock Company of LM Ericsson"), commonly known as Ericsson, is a Swedish multinational networking and telecommunications company headquartered in Stockholm. The company sells infrastructure, software, and services in inform ...
had made offers,
and Ericsson emerged as the victor in the following auction, with a purchase price of $1.13 billion.
Avaya
Avaya Holdings Corp., often shortened to Avaya (), is an American multinational technology company headquartered in Durham, North Carolina, that provides cloud communications and workstream collaboration services. The company's platform inclu ...
won an auction for Nortel's Enterprise Solutions business, including Nortel's stake in Nortel Government Solutions and
DiamondWare, for $900 million,
after having placed a stalking horse bid of $475 million.
In November, Nortel sold its MEN (Metro Ethernet Networks) unit to
Ciena Corporation for US$530 million in cash and US$239 million in convertible notes,
and its
GSM
The Global System for Mobile Communications (GSM) is a standard developed by the European Telecommunications Standards Institute (ETSI) to describe the protocols for second-generation ( 2G) digital cellular networks used by mobile devices such ...
business at auction to
Ericsson
(lit. "Telephone Stock Company of LM Ericsson"), commonly known as Ericsson, is a Swedish multinational networking and telecommunications company headquartered in Stockholm. The company sells infrastructure, software, and services in inform ...
and
Kapsch for US$103 million.
Hitachi
() is a Japanese multinational conglomerate corporation headquartered in Chiyoda, Tokyo, Japan. It is the parent company of the Hitachi Group (''Hitachi Gurūpu'') and had formed part of the Nissan ''zaibatsu'' and later DKB Group and Fuyo G ...
purchased the Next Generation Packet Core assets. As insurance against judgments in class action lawsuits filed by former employees, John Roth filed in December 2009 for a US$1 billion indemnification from Nortel, joining the list of U.S. creditors.
In February 2010,
Ernst & Young
Ernst & Young Global Limited, trade name EY, is a multinational professional services partnership headquartered in London, England. EY is one of the largest professional services networks in the world. Along with Deloitte, KPMG and Pricewat ...
, the court-appointed monitor of Nortel's Canadian bankruptcy proceedings, reported that the assets of Nortel's
Health and Welfare Trust had a shortfall of $37 million in its net assets as of December 31, 2008. The trust supports pensioners' medical, dental and life insurance benefits, as well as income support for some groups such as long-term disability recipients.
Also in February, Nortel negotiated a $57 million deal to wind up the health care and other benefits provided to former Canadian employees. Shortly afterwards, Nortel proposed spending $92.3M on retention bonuses for 1,475 employees in its Nortel Business Services and Corporate groups, with $2.5 million in incentives going to Christopher Ricaute, president of Nortel Business Services; $27 million allocated for Canadian employees; and $55 million allocated for U.S. employees.
The proposed plan was later extended by an additional $27 million.
Claiming that the retention bonuses proposal was extraordinary, acting US trustee Roberta DeAngelis objected to the payment of $55.6 million to 866 employees.
However, court-appointed representatives for Nortel's former employees, who are creditors in the Ontario bankruptcy court, have
signed an agreement to not oppose any employee incentive program.
GENBAND
Ribbon Communications US LLC is a public company that makes software, IP and optical networking solutions for service providers, enterprises and critical infrastructure sectors. The company was formed in 2017, following the merger of Genband and ...
purchased the Carrier VoIP and Application Solutions (CVAS) unit in May 2010, as Nortel accepted its stalking horse bid of $282 million, with adjustments that decreased the net sale price to about $100 million, without a formal bidding process.
Ericsson purchased Nortel's share in its joint venture with LG Electronics for US$242 million, forming
LG-Ericsson
Ericsson-LG is a joint venture company owned by the Swedish group Ericsson (75%) and the South Korean group LG Electronics (25%). Founded in November 2005, it engineers and designs telecommunications equipment, with LG providing distribution and ...
, in June 2010.
Ericsson also purchased Nortel's final operating unit, the Multi-Service Switch division, in September 2010 for US$65 million.
Nortel's
Ottawa campus on Carling Avenue was purchased by
Public Works and Government Services Canada
Public Services and Procurement Canada (PSPC; french: Services publics et Approvisionnement Canada)''Public Services and Procurement Canada'' is the applied title under the Federal Identity Program; the legal title is Department of Public Works ...
(PWGSC) in October 2010 for a cash purchase price of CDN$208 million, to serve as the new home of Canada's
National Defence Headquarters.
Nortel's 53.13% stake in Turkish company Nortel Netaş was acquired by
One Equity Partners
One Equity Partners is a private equity firm with over $10 billion in assets under management which primarily deals with the industrial, healthcare and technology sectors in North America and Europe. One Equity Partners was the merchant banking a ...
(OEP) and Rhea Investments for $68 million in December 2010.
The last major asset of Nortel, approximately 6,000 patents and patent applications encompassing technologies such as wireless, wireless 4G, data networking, optical, voice, Internet, and semiconductors, was sold for $4.5 billion to a consortium including
Apple
An apple is an edible fruit produced by an apple tree (''Malus domestica''). Apple trees are cultivated worldwide and are the most widely grown species in the genus '' Malus''. The tree originated in Central Asia, where its wild ancest ...
, EMC, Ericsson,
Microsoft
Microsoft Corporation is an American multinational technology corporation producing computer software, consumer electronics, personal computers, and related services headquartered at the Microsoft Redmond campus located in Redmond, Washi ...
,
BlackBerry Limited
BlackBerry Limited is a Canadian software company specializing in cybersecurity. Founded in 1984, it was originally known as Research In Motion (RIM). As RIM, it developed the BlackBerry brand of interactive pagers, smartphones, and tablets ...
, and
Sony
, commonly stylized as SONY, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan. As a major technology company, it operates as one of the world's largest manufacturers of consumer and professional ...
, pending American and Canadian court approval.
(Google had placed the initial stalking horse bid of $900 million
and later upped the bid to $1,902,160,540, then $2,614,972,128, and eventually $3.14159 billion, which are references to
Brun's constant,
Meissel–Mertens constant
The Meissel–Mertens constant (named after Ernst Meissel and Franz Mertens), also referred to as Mertens constant, Kronecker's constant, Hadamard– de la Vallée-Poussin constant or the prime reciprocal constant, is a mathematical constant in n ...
, and
pi.)
Bankruptcy filings state that Nortel owed former Canadian engineers $285,000 for patent awards that were not paid.
In October 2011, the administrators of Nortel's British subsidiary lost their appeal to overturn a court order requiring them to pay £2.1 billion into Nortel's underfunded pension plan.
Nortel's U.S. retirement income plan is now managed by
PBGC Pension Benefit Guaranty Corporation.
In January 2014, a pact between the U.S. and European divisions of Nortel was approved by a U.S. court.
However, litigation continued. In April 2016, Nortel went back to court for a fresh round of legal arguments in a seven-year-old bankruptcy which cost creditors about $2 billion including attorney fees. Courts in the U.S. and Canada approved a negotiated settlement among competing creditors in January 2017.
Products
Nortel made
telecommunications
Telecommunication is the transmission of information by various types of technologies over wire, radio, optical, or other electromagnetic systems. It has its origin in the desire of humans for communication over a distance greater than that ...
,
computer network
A computer network is a set of computers sharing resources located on or provided by network nodes. The computers use common communication protocols over digital interconnections to communicate with each other. These interconnections are ...
equipment and
software
Software is a set of computer programs and associated documentation and data. This is in contrast to hardware, from which the system is built and which actually performs the work.
At the lowest programming level, executable code consist ...
. It served both general businesses and communications carriers (
landline telephone,
mobile phone
A mobile phone, cellular phone, cell phone, cellphone, handphone, hand phone or pocket phone, sometimes shortened to simply mobile, cell, or just phone, is a portable telephone that can make and receive calls over a radio frequency link whi ...
, and
cable TV
Cable television is a system of delivering television programming to consumers via radio frequency (RF) signals transmitted through coaxial cables, or in more recent systems, light pulses through fibre-optic cables. This contrasts with broa ...
carriers). Technologies included
telephonic (voice) equipment,
fiber optics
An optical fiber, or optical fibre in Commonwealth English, is a flexible, transparent fiber made by drawing glass (silica) or plastic to a diameter slightly thicker than that of a human hair. Optical fibers are used most often as a means t ...
,
local wireless, and
multimedia
Multimedia is a form of communication that uses a combination of different content forms such as text, audio, images, animations, or video into a single interactive presentation, in contrast to tradit ...
.
Past products included:
Criticism and controversy
Payments to lawyers and accountants
In 2016, the
Canadian Broadcasting Corporation
The Canadian Broadcasting Corporation (french: Société Radio-Canada), branded as CBC/Radio-Canada, is a Canadian public broadcaster for both radio and television. It is a federal Crown corporation that receives funding from the governmen ...
reported that lawyers and accountants received billion from Nortel's estate.
Environmental damage
After bankruptcy, Nortel's estate faced million in claims to pay for environmental damage at various sites, including Belleville, Brockville, Kingston and London.
Espionage and hacks
In September 1991,
Julian Assange
Julian Paul Assange ( ; Hawkins; born 3 July 1971) is an Australian editor, publisher, and activist who founded WikiLeaks in 2006. WikiLeaks came to international attention in 2010 when it published a series of leaks provided by U.S. Army int ...
was discovered in the act of hacking into the Melbourne master terminal of Nortel.
In 2012, ''The Wall Street Journal'' reported that in 2004, Nortel discovered that
crackers gained almost-complete access to Nortel's systems. Beginning in at least 2000 they accessed documents including emails, technical papers, research, development reports, and business plans. The breach was not properly addressed by the time the company filed for bankruptcy in 2009. Hackers working from Chinese IP addresses had allegedly used seven passwords of Nortel executives, including a former CEO, to penetrate networks owned by the company.
Brian Shields, a former senior systems security advisor for Nortel, led an internal investigation into the breach and exposed
rootkit software on at least two machines in 2009 that allowed hackers to control them remotely and monitor email. Despite the original discovery in 2004 and the subsequent investigation that led to the rootkit detection in 2009, Nortel allegedly ignored the problem and failed to disclose it to potential buyers of its business.
Avaya
Avaya Holdings Corp., often shortened to Avaya (), is an American multinational technology company headquartered in Durham, North Carolina, that provides cloud communications and workstream collaboration services. The company's platform inclu ...
and
Genband
Ribbon Communications US LLC is a public company that makes software, IP and optical networking solutions for service providers, enterprises and critical infrastructure sectors. The company was formed in 2017, following the merger of Genband and ...
both acquired parts of Nortel, and some employees used old Nortel machines connected to the new companies' networks. Although Avaya says it has dealt with the issue, Shields says "it's despicable that Nortel didn't say anything", leaving it up to him to inform the new company of his investigation. Nortel refused to comment on The Wall Street Journal report, but former CEO
Mike Zafirovski, in charge between 2005 and 2009, claimed the company "did not believe it was a real issue".
Shields alleged that the hacking may have benefited Chinese competitors such as
Huawei
Huawei Technologies Co., Ltd. ( ; ) is a Chinese multinational technology corporation headquartered in Shenzhen, Guangdong, China. It designs, develops, produces and sells telecommunications equipment, consumer electronics and various sma ...
and
ZTE
ZTE Corporation is a Chinese partially state-owned technology company that specializes in telecommunication. Founded in 1985, ZTE is listed on both the Hong Kong and Shenzhen Stock Exchanges.
ZTE's core business is wireless, exchange, op ...
. While unable to offer conclusive proof Shields stated that "When 2000 came along, then it was a downward slide. And that coincidentally is the year when Huawei started selling on the international market. How coincidental."
Government bailouts
2003
On February 16, 2003, the
Winnipeg Sun published an article criticising the Canadian Federal government for propping up "mega-loser Nortel" through
Export Development Canada (EDC). The article interviewed Walter Robinson of the
Canadian Taxpayers Federation who termed this EDC support as "corporate welfare at its worst.". Mr Robinson was appalled that Canadians who already lost billions on Nortel on the stock market would be asked for even more money through their taxes to support Nortel.
2009
The EDC had agreed to provide up to million in short-term financing through an existing bonding facility. This money was previously available to Nortel, and no special funding was made available. The Canadian government resisted characterizing its position on Nortel as a bailout.
Illegal breach of trust in Nortel's Health and Welfare Trust
There have been reports of financial irregularities at Nortel's Health and Welfare Trust.
Diane Urquhart, a financial analyst, testified before a parliamentary committee that $100 million is missing from the HWT and that a $37 million loan to the corporation has not been paid back. The HWT was an unregistered trust maintained by Nortel to provide medical, dental, life insurance, long-term disability and survivor income and pension transition benefits.
Until 2005 Nortel fully funded the disability insurance in its HWT. However, it is alleged that since then, the HWT Governance Committees and third party
trustee
Trustee (or the holding of a trusteeship) is a legal term which, in its broadest sense, is a synonym for anyone in a position of trust and so can refer to any individual who holds property, authority, or a position of trust or responsibility to ...
,
Northern Trust
Northern Trust Corporation is a financial services company headquartered in Chicago that caters to corporations, institutional investors, and ultra high net worth individuals. Northern Trust is one of the largest banking institutions in the Un ...
, breached their
fiduciary
A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person. One party, for exa ...
duties to protect Nortel's disabled employees and survivors of deceased employees by allowing Nortel to misdirect over million from the HWT for purposes inconsistent with the terms of the HWT.
As of March 1, 2012, Northern Trust continues to act as the paying agent for Canadian
Nortel pensioners.
Bookkeeping irregularities
In 2007, both the
U.S. Securities and Exchange Commission and the
Ontario Securities Commission
The Ontario Securities Commission (OSC) is a regulatory agency which administers and enforces securities legislation in the Canadian province of Ontario. The OSC is an Ontario Crown agency which reports to the Ontario legislature through the ...
laid charges against former senior financial officials from Nortel including Frank Dunn who was fired from Nortel in 2004. Frank Dunn was promoted from
chief financial officer
The chief financial officer (CFO) is an officer of a company or organization that is assigned the primary responsibility for managing the company's finances, including financial planning, management of financial risks, record-keeping, and fina ...
to replace John A. Roth as
CEO
A chief executive officer (CEO), also known as a central executive officer (CEO), chief administrator officer (CAO) or just chief executive (CE), is one of a number of corporate executives charged with the management of an organization especially ...
in November 2001. According to the SEC, Dunn and three other financial officers began to fudge revenue by misusing "
bill and hold A bill and hold transaction occurs when a company recognizes revenue before delivery takes place. Normally a revenue is not recognizable until goods are delivered or services are rendered. Exceptions are made when a customer specifically requests ...
" transactions starting "no later than September, 2000". The SEC said that at least a year's worth of the alleged book-keeping took place while John Roth was still CEO of Nortel, even though no charges were laid against him.
Treatment of Nortel pensioners
On June 23, 2010, the News and Observer published a story criticizing treatment pensioners have been receiving from their former employer, Nortel. According to the article, Nortel has asked a federal court to terminate medical coverage, prescription drug coverage, long-term disability, and life insurance of 4,000 retirees and dependents, claiming the benefits are costing the company $2 million per month. Nortel blamed the company's creditors for this decision.
[
]
Ex-CEO as creditor
In the middle of the decade several class-action lawsuits were filed against
John Roth and others, by former employees who felt that their 401K company plans were depleted due to misrepresentation by the defendants. They claimed they were duped into investing in Nortel stock, when those who encouraged them to do so allegedly knew that the company was ailing. John Roth left Nortel in 2001 with more than million.
In 2009, Roth filed a claim for billion, aiming to become a creditor to the assets of Nortel along with all other Nortel employees, in case the class action lawsuits against him succeeded.
Conflicts of interest
During Nortel's 2002 annual
shareholders' meeting held in
Halifax,
Nova Scotia
Nova Scotia ( ; ; ) is one of the thirteen provinces and territories of Canada. It is one of the three Maritime provinces and one of the four Atlantic provinces. Nova Scotia is Latin for "New Scotland".
Most of the population are native Eng ...
, several
shareholder
A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the legal o ...
s (including
Robert Verdun Robert Verdun may refer to:
* J Robert Verdun, Canadian activist shareholder-rights advocate
* Robert Verdun (figure skater), Belgian figure skater
{{hndis, Verdun, Robert ...
) complained about non-arms-length relationships with service providers such as director
Yves Fortier, who provided legal services to Nortel while sitting on its board, and Nortel's auditors,
Deloitte & Touche LLP
Deloitte Touche Tohmatsu Limited (), commonly referred to as Deloitte, is an international professional services network headquartered in London, England. Deloitte is the largest professional services network by revenue and number of professio ...
, who were paid $15 million for non-auditing services.
Headquarters bugging
In 2013 workers preparing the former Nortel headquarters for the
Department of National Defence Department of Defence or Department of Defense may refer to:
Current departments of defence
* Department of Defence (Australia)
* Department of National Defence (Canada)
* Department of Defence (Ireland)
* Department of National Defense (Philippin ...
discovered electronic eavesdropping devices. The bugs found were older and non-operational leading Canadian intelligence to draw the conclusion that the former tenant Nortel and not the future tenant MND was the target.
IP theft and knockoffs
In 2001 Nortel identified knockoff products circulating in the Chinese market, in which they did not compete. Nortel management chose not to press the issue.
Corporate information
Headquarters
![Nortel - Carling Campus (3443785027)](https://upload.wikimedia.org/wikipedia/commons/e/e8/Nortel_-_Carling_Campus_%283443785027%29.jpg)
During Nortel's dissolution the headquarters was relocated to 5945 Airport Road in
Mississauga, Ontario
Mississauga ( ), historically known as Toronto Township, is a city in the Canadian province of Ontario. It is situated on the shores of Lake Ontario in the Regional Municipality of Peel, adjoining the western border of Toronto. With a popu ...
.
Previous locations of its head offices included 60 Moodie Drive in
Ottawa
Ottawa (, ; Canadian French: ) is the capital city of Canada. It is located at the confluence of the Ottawa River and the Rideau River in the southern portion of the province of Ontario. Ottawa borders Gatineau, Quebec, and forms the c ...
(now headquarters of
Department of National Defence Department of Defence or Department of Defense may refer to:
Current departments of defence
* Department of Defence (Australia)
* Department of National Defence (Canada)
* Department of Defence (Ireland)
* Department of National Defense (Philippin ...
), 8200 Dixie Road in
Brampton, Ontario
Brampton ( or ) is a city in the Canadian province of Ontario. Brampton is a city in the Greater Toronto Area (GTA) and is a lower-tier municipality within Peel Region. The city has a population of 656,480 as of the 2021 Census, making it ...
(sold to
Rogers Communications
Rogers Communications Inc. is a Canadian communications and media company operating primarily in the fields of wireless communications, cable television, telephony and Internet, with significant additional telecommunications and mass media ass ...
in 2006 and now known as
Rogers Park, Brampton) and 195 The West Mall in
Toronto
Toronto ( ; or ) is the capital city of the Canadian province of Ontario. With a recorded population of 2,794,356 in 2021, it is the most populous city in Canada and the fourth most populous city in North America. The city is the anch ...
(now used by
SNC-Lavalin).
Global worksites, partners, and customers
![Namco Nortel USA](https://upload.wikimedia.org/wikipedia/commons/3/37/Namco_Nortel_USA.jpg)
Nortel expanded into the U.S. in 1971. The company eventually had employees in over 100 locations in the U.S. with
R&D,
software engineering
Software engineering is a systematic engineering approach to software development.
A software engineer is a person who applies the principles of software engineering to design, develop, maintain, test, and evaluate computer software. The term '' ...
, and sales centres in many states including
California
California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the m ...
,
Florida
Florida is a state located in the Southeastern region of the United States. Florida is bordered to the west by the Gulf of Mexico, to the northwest by Alabama, to the north by Georgia, to the east by the Bahamas and Atlantic Ocean, and ...
,
Georgia
Georgia most commonly refers to:
* Georgia (country), a country in the Caucasus region of Eurasia
* Georgia (U.S. state), a state in the Southeast United States
Georgia may also refer to:
Places
Historical states and entities
* Related to the ...
,
Illinois
Illinois ( ) is a state in the Midwestern United States. Its largest metropolitan areas include the Chicago metropolitan area, and the Metro East section, of Greater St. Louis. Other smaller metropolitan areas include, Peoria and Rock ...
,
Maryland
Maryland ( ) is a state in the Mid-Atlantic region of the United States. It shares borders with Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware and the Atlantic Ocean t ...
,
Massachusetts
Massachusetts (Massachusett: ''Muhsachuweesut Massachusett_writing_systems.html" ;"title="nowiki/> məhswatʃəwiːsət.html" ;"title="Massachusett writing systems">məhswatʃəwiːsət">Massachusett writing systems">məhswatʃəwiːsət'' En ...
,
North Carolina
North Carolina () is a U.S. state, state in the Southeastern United States, Southeastern region of the United States. The state is the List of U.S. states and territories by area, 28th largest and List of states and territories of the United ...
,
Texas
Texas (, ; Spanish: ''Texas'', ''Tejas'') is a state in the South Central region of the United States. At 268,596 square miles (695,662 km2), and with more than 29.1 million residents in 2020, it is the second-largest U.S. state by ...
, and
Virginia
Virginia, officially the Commonwealth of Virginia, is a state in the Mid-Atlantic and Southeastern regions of the United States, between the Atlantic Coast and the Appalachian Mountains. The geography and climate of the Commonwealth are ...
. Nortel's full-service R&D centres were located in
Ottawa
Ottawa (, ; Canadian French: ) is the capital city of Canada. It is located at the confluence of the Ottawa River and the Rideau River in the southern portion of the province of Ontario. Ottawa borders Gatineau, Quebec, and forms the c ...
(its
R&D headquarters), Beijing, and
Guangzhou
Guangzhou (, ; ; or ; ), also known as Canton () and Chinese postal romanization, alternatively romanized as Kwongchow or Kwangchow, is the Capital city, capital and largest city of Guangdong Provinces of China, province in South China, sou ...
.
In Canada, Nortel also had R&D sites in Montreal,
Belleville, and
Calgary
Calgary ( ) is the largest city in the western Canadian province of Alberta and the largest metro area of the three Prairie Provinces. As of 2021, the city proper had a population of 1,306,784 and a metropolitan population of 1,481,806, maki ...
. In the United States, Nortel's major R&D sites were in
Research Triangle Park
Research Triangle Park (RTP) is the largest research park in the United States, occupying in North Carolina and hosting more than 300 companies and 65,000 workers.
The facility is named for its location relative to the three surrounding cities ...
(North Carolina),
Richardson
Richardson may refer to:
People
* Richardson (surname), an English and Scottish surname
* Richardson Gang, a London crime gang in the 1960s
* Richardson Dilworth, Mayor of Philadelphia (1956-1962)
Places Australia
* Richardson, Australian Capi ...
(Texas),
Billerica (Massachusetts), and
Santa Clara.
Nortel had a significant presence in Europe, Middle East, Africa, the
Caribbean
The Caribbean (, ) ( es, El Caribe; french: la Caraïbe; ht, Karayib; nl, De Caraïben) is a region of the Americas that consists of the Caribbean Sea, its islands (some surrounded by the Caribbean Sea and some bordering both the Caribbean ...
, and
Latin America
Latin America or
* french: Amérique Latine, link=no
* ht, Amerik Latin, link=no
* pt, América Latina, link=no, name=a, sometimes referred to as LatAm is a large cultural region in the Americas where Romance languages — languages derived ...
. Nortel delivered network infrastructure and communication services to customers across Asia in (mainland) China, Hong Kong, Taiwan, South Korea, Japan, Singapore, Thailand, Malaysia, India, Pakistan, Australia, New Zealand, and Turkey (Nortel owned 53.17% of
Nortel Netaş, originally established as a joint venture with Turkish
PTT in 1967).
In addition, the company had three joint ventures in the People's Republic of China, including Guangdong Nortel Telecommunications Equipment (GDNT), which operated Nortel's full service R&D centres in China.
Business structure
At the start of 2010, based on membership in Nortel's benefit plan, there were 1,637 employees working for Nortel Networks and 982 working for Nortel Technology in Canada.
In February 2008, Nortel employed approximately 32,550 people worldwide, including 6,800 employees in Canada and 11,900 in the United States.
Nortel operations were divided into the following segments:
* Carrier Networks (CN): Mobility networking solutions, including
CDMA
Code-division multiple access (CDMA) is a channel access method used by various radio communication technologies. CDMA is an example of multiple access, where several transmitters can send information simultaneously over a single communicatio ...
,
GSM
The Global System for Mobile Communications (GSM) is a standard developed by the European Telecommunications Standards Institute (ETSI) to describe the protocols for second-generation ( 2G) digital cellular networks used by mobile devices such ...
, and
UMTS
The Universal Mobile Telecommunications System (UMTS) is a third generation mobile cellular system for networks based on the GSM standard. Developed and maintained by the 3GPP (3rd Generation Partnership Project), UMTS is a component of the In ...
, and carrier networking solutions, both circuit and packet based.
* Enterprise Solutions (ES): Enterprise networking solutions, including circuit and packet based voice, data, security, multimedia messaging and conferencing, and call centres.
* Metro Ethernet Networks (MEN): Optical and metropolitan area networking solutions, for carrier and enterprise customers.
* Global Services (GS): Services in four areas: network implementation, network support, network management, and network applications (including web services).
Corporate governance
Nortel's board of directors resigned and the board disbanded effective October 3, 2012. All remaining executive officers also resigned effective this date. As part of the wind-down process, a court order was issued providing Ernst & Young Inc., the court-appointed monitor in Nortel's creditor protection proceedings, the ability to exercise any powers which may be properly exercised by a board of directors of Nortel.
Former members of the board of directors
*
Jalynn H. Bennett, CM
* Dr. Manfred Bischoff
*
James Blanchard
James Johnston Blanchard (born August 8, 1942) is an American retired attorney, diplomat, and politician who served as the 45th governor of Michigan from 1983 to 1991. A member of the Democratic Party, Blanchard previously served in the Unite ...
* Robert Ellis Brown
*
Frank C. Carlucci
Frank Charles Carlucci III ( ; October 18, 1930 – June 3, 2018) was an American politician and diplomat who served as the United States Secretary of Defense from 1987 to 1989 in the administration of President Ronald Reagan. He was the ...
, former chairman of the board
*
John Cleghorn
*
Frank Dunn
Frank A. Dunn is a Canadian business executive who was the chief executive officer of Nortel Networks. In 2007, the U.S. Securities and Exchange Commission filed civil fraud charges against him, and three former senior executives, in a wide-rangi ...
*
Yves Fortier
* Hon. James B. Hunt Jr.
* Robert Alexander Ingram
*
Kristina M. Johnson
Kristina M. Johnson (born May 7, 1957) is an American business executive, engineer, academic, and former government official who served as the 13th chancellor of the State University of New York from September 2017 until June 2020. In June 2020 ...
*
John Alan MacNaughton
* Hon.
John P. Manley
*
Richard David McCormick
*
Claude Mongeau
*
William Owens (Admiral)
* Harry Jonathan Pearce, former chairman of the board
* David Richardson, former chairperson
*
John Andrew Roth
*
Guylaine Saucier Guylaine Saucier , (born 10 June 1946), a Canadians, Canadian, is the CEO of Gérard Saucier Ltée, a major group specialing in forestry products. She was the chairperson of the Canadian Broadcasting Corporation (CBC). She is a member of the board o ...
* Sherwood Smith
* John D. Watson
*
Lynton "Red" Wilson, former chairman of the board
*
Mike Zafirovski, former president and CEO
Past leadership
*
Edward Fleetford Sise Edward Fleetford Sise (1877 - 1943) Canadian business man, First President of Northern Electric Company (now called Nortel) 1914 - 1919).
See also
* Charles Fleetford Sise Sr.
* Charles Fleetford Sise Jr.
* Paul Fleetford Sise
References
Ext ...
, President of the Northern Electric Company (1914–1919)
*
Paul Fleetford Sise
Paul Fleetford Sise (November 10, 1879 – August 1, 1951) Canadian businessman, President of Northern Electric ( Nortel 1919 - 1948). graduated from McGill University in 1901 and was an adjutant to the 148th Battalion, CEF, from Montreal.
See ...
, President of the Northern Electric Company (1919–1948)
*
Ralph Holley Keefler, President of the Northern Electric Company (1948 –1964)
*
Vernon Oswald Marquez Vernon Oswald Marquez or V. O. Marquez (born in Trinidad) was president of the Northern Electric Company (now Nortel
Nortel Networks Corporation (Nortel), formerly Northern Telecom Limited, was a Canadian multinational telecommunications and d ...
, President of the Northern Electric Company (1967-1971)
* John C. Lobb, President (1971-1974)
* David G. Vice, President and COO
*
Walter Frederick Light, President of Northern Telecom (1974-1982)
*
Edmund B. Fitzgerald, President (1982-1989)
* Paul G. Stern, CEO (1989-1992)
*
Jean Monty, President
* Roy Merrills, President
*
John Roth, President, CEO and chairman of the Board of Nortel Networks (1997-2001)
*
Frank Dunn
Frank A. Dunn is a Canadian business executive who was the chief executive officer of Nortel Networks. In 2007, the U.S. Securities and Exchange Commission filed civil fraud charges against him, and three former senior executives, in a wide-rangi ...
, President and CEO of Nortel Networks (2001-2004)
*
Bill Owens, President and CEO of Nortel Networks (2004-2005)
*
Mike Zafirovski, President and CEO of Nortel Networks (2005-2009)
See also
*
Accounting scandals
*
1-Meg Modem
*
Bell Telephone Memorial
*
Bell-Northern Research
Bell-Northern Research (BNR) was a telecommunications research and development company established In 1971 when Bell Canada and Northern Electric combined their R&D organizations. It was jointly owned by Bell Canada and Northern Telecom. BNR w ...
*
Busy override
*
Canadian Industrial Research and Development Organizations
Expenditures by Canadian corporations on research and development accounted for about 50% of all spending on scientific research and development in Canada in 2007.
In the corporate sector research and development tends to focus on the creation or ...
*
Data 100
In the pursuit of knowledge, data (; ) is a collection of discrete Value_(semiotics), values that convey information, describing quantity, qualitative property, quality, fact, statistics, other basic units of meaning, or simply sequences of sy ...
*
Multiservice Switch
Multiservice Switch (MSS) is originally a Nortel line of routers, historically called Passport, designed for carrier core and edge routing. They run the Passport Carrier Release operating system. The MSS has a significant installed base, with ...
*
Nortel Government Solutions
*
Passport Carrier Release Passport Carrier Release (PCR) is a version of the Passport Switch (now Multiservice Switch) software designed to run in telecommunications carrier environments. It was formerly developed by Nortel. After the sale in 2009 of most Nortel's assets, th ...
*
Nortel Retirees and former employees Protection Canada (NRPC)
*
List of Nortel protocols
* Nortel Simple Loop Prevention Protocol
* Distributed Multi-Link Trunking
* Distributed Split Multi-Link Trunking
* InterSwitch Trunk
* Metro Ethernet Routing Switch 8600
* Multi-link trunking
* Nortel Discovery Protocol
* Provider Backbone ...
Notes
References
Citations
Sources
* Bruce, Robert V
''Bell: Alexander Bell and the Conquest of Solitude''. Ithaca, New York:
Cornell University Press
The Cornell University Press is the university press of Cornell University; currently housed in Sage House, the former residence of Henry William Sage. It was first established in 1869, making it the first university publishing enterprise in th ...
, 1990, .
*
*
*
* Reville, F. Douglas
History of the County of Brant: Illustrated With Fifty Half-Tones Taken From Miniatures And Photographs Brantford, ON: Brant Historical Society, Hurley Printing, 1920. Retrieved from Brantford.Library.on.ca May 4, 2012.
External links
*
Nortel Networks Inc., the US subsidiary
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