Canadian telecom giant Nortel may seek bankruptcy protection
11 Dec 2008
North America's largest but struggling telecommunications equipment maker, Nortel Networks is reported to have consulted with legal advisers to explore the possibility of filing bankruptcy protection in case it's planned restructuring fail.
Toronto-based Nortel's spokesman confirmed that the company has consulted legal advisors on helping Nortel's direction and the company is focused on reorganising and reducing expenses but denied that it is filing for bankruptcy.
Reacting to consistent media reports of it seeking to file bankruptcy, the company said in a statement that, "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."
During 2001 telecoms problems, Nortel was hard hit first by an accounting scandal. Now again in the current financial crisis there has been a scaling back of capital spending by some of its biggest wireless customers, including Sprint Nextel, the third-largest US mobile network operator.
Once Canada's largest company and a technology giant, Nortel's share price was C$0.51 in the Toronto Stock Exchange yesterday compared to high of C$1,100 in the mid 2000's and is valued at $194 million today compared with about $250 billion during 2000.
The company lost nearly $7 billion since 2005 and CEO, Mike Zafirovski who was appointed during the same time, has been struggling to make the company viable as its competitors like Alcatel-Lucent and low cost vendor, Huawei Technologies flourished with newer technologies while Nortel was still selling outdated ones.
