9 Comments

Summary:

According to the Wall Street Journal,  telecommunications equipment maker Nortel is talking to lawyers about its strategy, including filing for bankruptcy.  This is grim news for the vendor and the industry at large. Nortel has a lot of debt ($4.5 billion as of the last quarter), […]

logo_purpleAccording to the Wall Street Journal,  telecommunications equipment maker Nortel is talking to lawyers about its strategy, including filing for bankruptcy.  This is grim news for the vendor and the industry at large. Nortel has a lot of debt ($4.5 billion as of the last quarter), is facing continued pressure from emerging competitors such as Huwei, and the overall equipment industry is being pummeled by the global financial crisis. Nortel laid off 1,300 workers on Nov. 10, bringing its total layoffs this year to 2,500, and a spokeswoman says the company is still implementing its restructuring plan.

“Nortel is hard at work reshaping the business to even better serve our customers. There are those who fuel negative speculation, but there are many more who believe that Nortel has put in place the necessary plans to strengthen our financial footing and reset our cost base. Even just two weeks ago, Standard & Poor’s reaffirmed our credit rating stating “Nortel should be able to sustain adequate levels of liquidity in the next 12-18 months…”

Nortel is a viable partner for the long term. We have no debt maturity until 2011, and we are preserving and strengthening our cash position. On November 10th, we put in place an aggressive plan to bring down costs by $400 million with a minimum level of cash outlay. The goals we laid out on November 10th have not changed. We remain focused on executing a significant shift to our operating model and cost base to reflect the economic environment that we are now in. Our commitment is to remain an innovation-driven organization — delivering value to our customers for the long term.”

Nortel does have good assets, customer wins and technology, which means a bankruptcy filing could lead to a buyer swooping in to cherry pick the company without the burden of $4.5 billion in debt.

You’re subscribed! If you like, you can update your settings

By Stacey Higginbotham

You're subscribed! If you like, you can update your settings

Related stories

  1. Nortel Seeks Bankruptcy Advice | All About Nortel Wednesday, December 10, 2008

    [...] GigaOm has a statement from a Nortel [...]

  2. Tony Rybczynski Nortel Wednesday, December 10, 2008

    Mark Twain was right. Here’s my view on my perspectives on what Nortel is doing to weather the storm.

    http://blog.tmcnet.com/the-hyperconnected-enterprise/business-aspects/nortel–aggressive-measures-trump-explorations-for-legal-advice.asp

  3. Top Posts « WordPress.com Thursday, December 11, 2008

    [...] Nortel Seeks Bankruptcy Advice According to the Wall Street Journal,  telecommunications equipment maker Nortel is talking to lawyers about its [...] [...]

  4. Alcatel Makes Cuts–Will It Help? Friday, December 12, 2008

    [...] as Alcatel’s customers cutting costs and competitors such as Nortel trying to raise cash and figure out how to steer through a downturn, it’s also an effort to make Alcatel more nimble in a competitive [...]

  5. A Nortel Bankruptcy Could Lead to a Deal Wednesday, January 14, 2009

    [...] could not be reached for comment, but bankruptcy rumors have dogged the company in the last few weeks. Tomorrow it has to make a $107 million interest payment on its debt — something that [...]

  6. Nortel is trying to raise money to solve for its current economic downturn, however chances for its bankruptcy may not be overlooked rumors at present.

  7. For most people borrowing money is not the way they would choose to go IF they had a choice; for people with bad credit it’s a double nightmare.It can require a great deal of paperwork and turn into an embarrassing situation. Thus, consumers prefer payday loans to face small, unanticipated expenses while avoiding costly bounced-check fees and overdue payment penalties.

  8. hey, great post. another one bites the dust.

  9. Nortel is trying to raise money to solve for its current economic downturn, however chances for its bankruptcy may not be overlooked rumors at present.

Comments have been disabled for this post