[IP] Nortel - House of Glass (fyi)

[Dave Farber <dave@farber.net>]

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From: Anonymous <e_r_murrow@hotmail.com>
Organization: Hotmail alias
Reply-To: Anonymous <e_r_murrow@hotmail.com>
Date: Mon, 11 Nov 2002 16:37:53 -0500
To: dave@farber.net
Subject: Nortel - House of Glass (fyi)

Dave, for interested IPers, a look at recent history of Nortel:

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House of Glass - Nortel's shattered legacy (5-part series)
 http://www.canada.com/ottawa/ottawacitizen/specials/business/

Associate business editor James Bagnall
The Ottawa Citizen, November 7-11, 2002

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Intro: The fall of Nortel - The inside story  http://tinyurl.com/2ij5

John Roth was the ultimate insider. He was a lifer with more than 30
years' experience in virtually all aspects of Nortel's far-flung
businesses. He understood the myriad technologies that percolated in its
labs and was comfortable with the mysterious politics that drove the
organization.

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1) How Nortel lost its way  http://tinyurl.com/2lxf

Nortel has been through hell in the past two years. Sixty thousand
layoffs. A 99-per-cent drop in share value. The sheer magnitude of the
collapse makes it hard to take in. How did one of Canada's great
companies so badly misread its industry? How could its top executives
have provided such solid assurances early in 2001 that all was well,
when they were plainly perched on a precipice?

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1b) How Nortel lost its way (page 2)  http://tinyurl.com/2idd

H&S had no problem producing a list -- its initial book included roughly
100 names. A committee of Nortel board members led by Wilson whittled
that down to about 20.

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2) Fooled by the Internet  http://tinyurl.com/2lxj

When Netscape Communications released its first Web browser in October
1994, it was a technology watershed. The browser made it so easy to surf
the Web that Internet traffic would soar during much of the next two
years. Entrepreneurs extrapolated and concluded that dozens of
fibre-optic networks would be needed to carry this torrent of data. This
set the stage for an orgy of building and Nortel, the leading player in
optical technology, became a prime beneficiary. But Internet growth
slowed markedly in 1997, eventually tripping up new telecom carriers who
wound up with too little revenue and too much capacity. In Part Two of
his series examining the rise and fall of Nortel, associate business
editor James Bagnall tells how Nortel got caught in the great telecom
gold rush of the late 1990s.

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3) Speed at any price  http://tinyurl.com/2lxl

Bay Networks president Dave House couldn't quite believe what he was
hearing. He had invited Nortel Networks chief executive John Roth in
March 1998 to see his 73-acre estate near San Jose, California.

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4) Spending the inheritance  http://tinyurl.com/2lxo

With Nortel's share price in the stratosphere during much of 1999 and
2000, plunking down billions of dollars for startups was seductively
easy. All Nortel's competitors were doing it -- Lucent, Alcatel and
especially Cisco. Their customers and investment bankers were urging
them on. But the result was that Nortel issued a billion new shares
worth $32 billion to pay for properties that, with one or two
exceptions, the company turned out not to need. In the fourth part of
his series on the rise and fall of Nortel, associate business editor
James Bagnall explains how the company was seduced by the mergers and
acquisitions culture and examines the damage that ensued.

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5) Will Nortel survive? http://tinyurl.com/2lxq

Little more than a year ago, the question of Nortel's survival would
have seemed preposterous. But as telecommunications carriers ratchet
down spending on next-generation networks for the second straight year,
Nortel is entering dangerous territory. Its cash cushion -- $4.2 billion
as of Sept. 30 -- is expected to drop 50 per cent by the end of next
year. A couple of lines of credit, totalling $2.7 billion, are unlikely
to be renewed. While Nortel isn't facing a liquidity crisis, its margin
for error is uncomfortably thin. Company CEO Frank Dunn is investing a
small fortune in a variety of next-generation technologies -- 3G
wireless, voice-over-Internet and optical transmission -- he hopes will
show the way to recovery. Nortel's 39,000 remaining employees (35,000 by
March 31) are plainly hoping their firm gets the timing right.

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