Nortel Networks

» see nortel.com as it lived, on the wayback machine

~ the obit ~

i missed nortel as a direct user. enterprise telecom hardware is not a thing you ever buy in turkey as a household, the dms switches and meridian pbx systems they made sat in türk telekom backbone rooms and corporate phone closets where i was never invited (close enough). still, the name was on the back of every magazine i read in the late 90s, in the small print on cisco-comparable spec sheets that i would never need to evaluate. by the time i was in university the company was already in the slow part of the slide, the press was a year ahead of the courts, and the courts were a year ahead of the bankruptcy filing.

nortel started as northern electric in december 1895, spun out of bell canada to manufacture telephone equipment for the canadian half of the western electric monopoly. it changed name to northern telecom in 1976, then to nortel networks in 1998 at the height of the dot-com run-up. by september 2000 the stock had climbed enough that the company alone was over a third of the toronto stock exchange's total value, C$398 billion in market cap. honestly, that number is hard to read straight, it means almost every canadian retirement fund had nortel in it.

then the optical networking market collapsed. nortel had bet the company on long-haul fiber gear right when the fiber glut was about to make every optical-equipment buyer stop buying. the stock fell from C$124 to under C$1 across 2001. the accounting fraud followed the stock down, executives had been pulling earnings forward to keep the run-up alive and the sec started asking questions in 2003. the recovery never came. chapter 11 was filed january 14 2009, the assets were sold across 2009 to 2011 to a mix of avaya, ericsson and ciena, and the patent portfolio went to a consortium of apple, microsoft, blackberry, sony, ericsson, and EMC for $4.5 billion in july 2011. the corporate shell sat empty for two more years before final dissolution on february 2 2013.

~ the rap sheet ~

~ what it built ~

the dms-100 was the canonical north american digital telephone switch from the 80s into the 2000s, the box your landline dial tone came out of if you lived anywhere on the continent. the meridian 1 pbx was the corporate phone system that every office of any size ran, the beige cabinet in the closet with the small lcd panel on the front. optera was the long-haul optical line that the late-90s fiber rollout was supposed to be standardized on. for a window from 1995 to about 2001 nortel was actually competing with cisco at the carrier-equipment level, with a bigger installed base on the legacy voice side and a thinner story on the data side.

~ the rise ~

the dot-com market had decided that telecom backbone was the next layer to be repriced, and nortel was the largest pure-play telecom-equipment company on a public exchange anywhere. the stock did what the rest of the bubble did, only with more leverage because the company was a real industrial business with real revenue. by the september 2000 peak nortel had ~94,500 employees worldwide and a research budget that was the largest single line item on the canadian r&d ledger. honestly, the executive bonus structure was tied to the share price in a way that the later fraud trials would describe as a structural incentive to massage the quarterly numbers. the federal court of canada acquitted the three executives in 2013 but the damage was already booked, the company was gone before the verdict came in.

~ the day it died ~

january 14 2009 was the chapter 11 filing in delaware, with parallel canadian filings under the companies' creditors arrangement act. ericsson took the cdma and gsm business for around $1.3 billion combined. avaya picked up the enterprise solutions division for $900 million, ciena got the metro ethernet networks unit for around $770 million in cash and notes. the patents went last, the rockstar consortium auction in july 2011 was the moment that retroactively defined the whole sale. apple wanted the touchscreen ip while microsoft was after the directory and authentication patents. honestly, the consortium then spent the next three years suing google over android with the portfolio, which is what nortel's last act of presence in the technology industry actually turned out to be.

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