Why nortel failed

He had been expecting something closer to a tie vote. Nortel would file for bankruptcy the next day, Jan. Although the move would be couched in soft terms, that this was just a tactical step designed to help Nortel restructure its affairs and re-emerge a stronger company, no one had a good feeling about this. In , we can view the events of the past decade somewhat more dispassionately, and assess the impact of this corporate disaster on the community at large.

Collectively, Ciena and the others today employ more than 3, in the Ottawa area. Nortel was a magnet for technical talent on six continents. In the Ottawa area, the company was an important source of business for hundreds of local suppliers. Consider that in , tech employment in Ottawa and Gatineau averaged about 58, Last year, it was 44, The inverse relationship between Nortel and government helped in other ways, too. Although Nortel had vastly overbuilt its real estate in anticipation of a perpetual internet boom, the federal government was in a position to snap up one empty building after another.

Not only was that 60 Moodie Dr. It gave the region extra time to adjust to the trauma, and for government real estate experts to justify their purchases of Nortel towers. Entrepreneurs planted seeds. Pythian, a database company, added hundreds of staff. Mitel began a string of acquisitions. Also, Nortel sold its assets at such bargain basement prices that the buyers — most notably optical communications specialist Ciena — could afford to take the time necessary to properly integrate the businesses.

Not all of it is being generated by high-tech. Cannabis giant Canopy Growth has hired a couple of hundred workers for its Kanata operation. Thousands of federal government employees have moved into Kanata and commute east. Robert Wang, the founder and CEO of Instant Brands — maker of the smart appliance everyone knows as Instant Pot — spent four years at Nortel during the late s boom.

Former Nortel managers fund startups and guide entrepreneurs through their participation on company boards. Len Anderson, a former Nortel employee, runs a Kanata business that refurbishes aging communications networks, many of them with the Nortel logo.

A power struggle ensued and on June 6, the two Garys — touted as the future leadership of the firm — were gone. Nortel dropped the Nokia deal and was back at Square One. Owed some gratitude for stepping into the firestorm left by Mr. Dunn, Mr. Owens has largely avoided scrutiny. It is a burden his successor has absorbed in spades. On Nov. Pearce announced the appointment of Mike Zafirovski.

Hired away from Motorola Inc. Pearce said. Former employees exulted the new chief. It was a huge morale boost. Huawei and ZTE Corp. Sprung from outsourced production ventures Nortel and other Western firms came to rely on in the early s, time and technological transfer transformed the two into voracious competitors selling products of comparable quality but for far less. Like that of Mr. Zafirovski was hired at a pivotal time of industry-wide consolidation. Commoditization — a price war in layman terms — was unfolding across numerous segments largely as a result of the low-cost wares Huawei and ZTE were flooding the market with.

Scale mattered more than ever and Nortel needed to act fast if it was to remain competitive. It was hard to split them. To me, that always stymied what Zafirovski wanted to do. By the time the executive announced a new vision in June — more aggressively embracing divestiture with a refocus on optical and carrier services — private-equity firms were knocking at the door, while capital markets were collapsing, pushing the firm into an ever more precarious financial position.

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