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Nortel

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Nortel Networks Corporation
Company typePublic
IndustryTelecommunications equipment, data networking hardware
PredecessorNorthern Telecom Limited
Founded1895 in Montreal, Quebec, Canada
Defunct2017
FateBankruptcy and asset divestiture
Headquarters
Ottawa
,
Canada
Area served
Worldwide
ProductsTelecommunications and data networking hardware
OwnerBell Canada (majority owner historically)
Number of employees
94,500 (at peak) (circa 2000s)

Nortel Networks Corporation (commonly known as Nortel), originally named Northern Telecom Limited, was a Canadian-based global manufacturer specializing in telecommunications and data networking hardware, with its main office located in Ottawa, Ontario. The company was established in Montreal, Quebec in 1895 under the name Northern Electric and Manufacturing Company. Ownership was largely held by Bell Canada and the Western Electric Company of the Bell System until an antitrust agreement in 1949. Nortel produced telecom equipment primarily based on licensed designs from Western Electric.

At its height, Nortel accounted for more than one-third of the overall market capitalization on the Toronto Stock Exchange (TSX) and employed approximately 94,500 people worldwide. In 2009, Nortel sought bankruptcy protection in both Canada and the United States, which triggered a dramatic 79% drop in its stock value. This bankruptcy marked the largest in Canadian history and led to substantial financial losses for pensioners, shareholders, and former staff members. By 2016, Nortel had divested billions worth of assets. The courts sanctioned a mutually agreed settlement concluding the bankruptcy process in 2017.

Origins

Alexander Graham Bell developed the foundational technology for the telephone in July 1874 while residing at his family’s farm in Tutela Heights near Brantford, Ontario. After creating his first functional prototype in Boston, he continued refining the design at this location. The inaugural telephone factory in Canada was established by James Cowherd of Brantford; this three-story brick facility manufactured telephones for the Bell System, earning Brantford the moniker The Telephone City.

Initially, Bell approached Boston-based manufacturer Charles Williams to produce 1,000 telephones for use in Canada; however, Williams’ small-scale operation could only fulfill a limited portion of the order. Subsequently, Bell collaborated with Cowherd, who founded Canada’s first telephone manufacturing plant and produced 2,398 telephones adhering to Bell’s specifications by 1881. Having studied manufacturing techniques in Boston, Cowherd returned to Brantford to manufacture telephones and innovate new models, including a transmitter capable of supporting conversations among three individuals simultaneously. His premature death due to tuberculosis resulted in the closure of Bell System’s Brantford facility. Production later recommenced in Montreal, eventually evolving into Northern Electric, then Northern Telecom, and ultimately Nortel.

A 1992 article from the Brantford Expositor expressed regret over the demolition of this historic factory building, highlighting local officials’ sorrow over losing the site where Bell’s initial telephone equipment was produced. A commemorative plaque recognizing its importance had been removed during the mid-1980s and transferred to the Brant County Museum.

Following Cowherd’s passing and the shutdown of his factory in 1881, Bell Telephone Company of Canada established a mechanical production division and shifted Canadian telephone equipment manufacturing to Montreal in 1882 to circumvent import restrictions imposed by the United States. By 1886, this division expanded its output to include switchboards, beginning with the 50-line Standard Magneto Switchboard. The operation grew steadily: by 1888 it employed fifty workers; by 1890 it became an independent branch with a workforce of two hundred and a new factory under construction.

However, production capacity soon outpaced demand for telephones alone, causing seasonal interruptions. Bell Canada’s charter prohibited manufacturing products unrelated to telephony. To diversify its product range and ensure continuous operation throughout the year, Bell Telephone of Canada separated its manufacturing division in 1895 as Northern Electric and Manufacturing Company Limited. This new company supplied telephones to external clients and broadened its product portfolio to include fire alarm boxes, police street call boxes, and fire department communication devices.

Northern Electric and Manufacturing Company

Northern Electric and Manufacturing Company Limited was established on December 7, 1895, with an initial capital stock of $50,000 divided into $100 shares. The Bell Telephone Company of Canada held 93% ownership, while the remaining shares were distributed among seven corporate directors. The inaugural general meeting of stockholders took place on March 24, 1896.

In December 1899, Bell Telephone Company of Canada purchased a cabling enterprise called "The Wire and Cable Company" for $500,000. By 1900, Northern Electric broadened its product range by producing Canada's first wind-up gramophones that played flat discs. The Wire and Cable Company was renamed "Imperial Wire and Cable Company" in 1911.

Northern Electric Company

Construction commenced in 1913 on a new manufacturing facility located on Shearer Street in Montreal to facilitate company consolidation. In January 1914, Northern Electric and Manufacturing combined with Imperial Wire and Cable, creating Northern Electric. The Shearer Street plant began operations in January 1915 and served as the main production site until the mid-1950s. Edward Fleetford Sise held the position of president, with his brother Paul Fleetford Sise acting as vice-president and general manager.

During the First World War, Northern Electric manufactured the Portable Commutator, a one-wire telegraphic switchboard designed for military applications. In 1922, the company introduced the "Peanut" vacuum tube priced at $5—this compact tube operated on a single dry-cell battery, marking early innovation prior to widespread alternating current adoption. Throughout the 1920s, Northern diversified its offerings to include kettles, toasters, cigar lighters, electric stoves, and washing machines.

January 1923 saw Northern Electric launch AM radio station CHYC-AM at its Shearer Street facility. In July of that year, CHYC-AM became the first station to provide entertainment broadcasts to passengers on transcontinental trains. Later in the decade, Northern developed the British Empire’s pioneering talking movie sound system for a theater in Montreal.

The Great Depression had a profound effect on Northern Electric; between 1930 and 1933, revenue dropped sharply from $34 million to $8.2 million, and employee numbers fell from 6,100 to 2,400.

Independence from Western Electric

Following a U.S. antitrust ruling in 1949, AT&T/Western Electric was compelled to divest its shareholding in Northern Electric to Bell Canada. By 1956, AT&T had completely separated from Northern Electric. Freed from Western Electric affiliations, Northern began creating its own product lines and released its first television sets in 1953 utilizing RCA tubes. Bell Canada became the sole owner in 1964; however, subsequent public stock offerings starting in 1973 gradually decreased Bell’s ownership percentage while maintaining majority control.

In 1966, Northern Electric Laboratories (which later evolved into Bell-Northern Research) initiated research into fiber optic technologies and began digitizing telephone communications by 1969. That same year marked Northern’s entry into the U.S. market with switching system sales and the establishment of its first American manufacturing plant in Michigan in 1972. During the late 1960s through early 1970s, Northern delivered some of the earliest digital switching systems.

Northern Telecom and Bell-Northern Research held early partial ownership of MicroSystems International, a semiconductor producer located near Ottawa.

Northern Telecom and the "Digital World" Era

In March 1976, the company adopted the name Northern Telecom Limited, marking a deliberate move toward digital technology specialization. As an industry innovator, Northern Telecom introduced a full suite of fully digital telecommunications products under the "Digital World" label. Among its flagship offerings was the DMS-100, a fully digital central office switch capable of handling up to 100,000 lines, which played a crucial role in driving revenue for nearly a decade and a half.

After launching its DMS digital switches in 1977, Nortel experienced rapid growth, particularly following the 1984 breakup of AT&T. The company established itself as a key supplier across Europe and China and became the first non-Japanese provider to serve Nippon Telegraph and Telephone.

Deregulation and Corporate Restructuring

The deregulation wave in 1983 led to the creation of Bell Canada Enterprises (BCE), which became the parent company overseeing both Bell Canada and Northern Telecom. Bell-Northern Research was co-owned equally by Bell Canada and Northern Telecom. Together, these three entities were collectively referred to as the tricorporate.

In 1995, coinciding with its centennial celebration, the company rebranded as Nortel with ambitions to lead the growing international market for both public and private telecommunications networks.

The Optical Market Surge and Subsequent Decline

Following its acquisition of Bay Networks in 1998, the company rebranded itself as Nortel Networks to emphasize its broad portfolio of multiprotocol, multiservice solutions tailored for global networking via the Internet and other communication infrastructures. This transaction, conducted through stock exchange, ended BCE's majority stake in Nortel.

By 1999, Nortel had begun outsourcing various manufacturing operations to contractors within North America.

In 2000, BCE spun off Nortel by distributing its shares directly to BCE shareholders. Bell-Northern Research was progressively absorbed into Nortel through initial majority ownership followed by complete acquisition.

During the late 1990s, investor speculation propelled Nortel’s stock price to record highs based on expectations of profits from fibre optic network equipment sales despite ongoing financial losses. Under CEO John Roth, while optical equipment sales surged initially, market saturation soon followed. The telecom bubble burst in 2000 dealt a significant blow to Nortel. Revenue declines were driven by market oversupply and the bankruptcy of major client WorldCom.

At its zenith, Nortel accounted for over one-third of the total market capitalization on the Toronto Stock Exchange (TSX), employing approximately 94,500 people worldwide with 25,900 based in Canada. Market value plummeted from C$398 billion in September 2000 to below C$5 billion by August 2002, with share prices falling from C$124 to just C$0.47. This collapse had severe repercussions for Canadian investors and pension funds and resulted in job losses for about 60,000 employees. Roth faced scrutiny after cashing out stock options worth C$135 million in 2000.

Roth stepped down in 2001. His planned successor, COO Clarence Chandran—who was on medical leave following a stabbing incident in 1997—resigned before assuming leadership. Subsequently, CFO Frank Dunn was appointed as CEO.

Financial Restatements

During Frank Dunn's tenure as CEO, Nortel underwent significant restructuring that included laying off approximately two-thirds of its workforce—around 60,000 employees—and recording writedowns approaching US$16 billion in 2001. Initially, these measures seemed effective, as the company reported a surprising return to profit in the first quarter of 2003. This performance triggered bonus payouts totaling $70 million to 43 senior executives, including $7.8 million to Dunn, $3 million to CFO Douglas Beatty, and $2 million to controller Michael Gollogly. However, Deloitte & Touche, Nortel's auditor, advised the board to scrutinize questionable financial results, which led to a restatement of nearly $900 million in liabilities as of June 30, 2003. This adjustment lowered reported net losses for the years 2000 through 2002 and boosted shareholders' equity. Twelve top executives returned $8.6 million in bonuses that had been awarded based on inaccurate accounting figures. Investigations uncovered that roughly $3 billion in revenue was improperly recorded between 1998 and 2000, with over $2 billion deferred to subsequent years and about $250 million completely removed. The scandal severely harmed Nortel's reputation and financial standing, incurring costs estimated at US$400 million for auditors and consultants.

To bolster liquidity, Nortel secured a US$750 million credit line from Export Development Canada in 2003, a move that sparked criticism as an example of corporate welfare.

On April 28, 2004, amid the unfolding scandal, CEO Dunn, CFO Beatty, and controller Gollogly were dismissed due to financial mismanagement and subsequently faced fraud charges from the Royal Canadian Mounted Police. Their trial commenced in January 2012 and concluded with acquittals for all three. Meanwhile, the U.S. Securities and Exchange Commission brought civil fraud charges against them and four vice-presidents; nevertheless, all remaining civil allegations from both the Ontario Securities Commission and SEC were dismissed on December 19, 2014.

Leadership Changes: Owens and Zafirovski

Following Dunn’s removal, retired U.S. Admiral Bill Owens—then serving on Nortel’s board—was appointed interim CEO. The company reinstated the Nortel brand for marketing purposes while retaining its official corporate name. In June 2005, Nortel acquired PEC Solutions, a provider of IT and telecommunications services for government clients, rebranding it as Nortel Government Solutions Incorporated (NGS). Later that August, Nortel entered into a joint venture with LG Electronics, holding a 51% stake aimed at delivering telecom and networking solutions across wireline, optical, wireless, and enterprise sectors both within South Korea and globally.

Peter Currie—former CFO of both the Royal Bank of Canada and Northern Telecom during the 1990s—assumed the role of Nortel’s CFO in 2005. Gary Daichendt, previously COO at Cisco Systems, joined as president and COO with expectations of succeeding Owens as CEO. Daichendt appointed former Cisco Chief Science Officer Gary Kunis as CTO. Both executives voiced concerns regarding Nortel’s strategic direction compared to Cisco’s approach. However, Daichendt resigned after just three months when his restructuring proposals and demands for Owens’ and Currie’s departure were rejected by the board; Kunis also left shortly thereafter. At year-end, directors Lynton "Red" Wilson and John Cleghorn retired.

Mike S. Zafirovski—formerly president and CEO of GE Lighting as well as Motorola’s president and COO—replaced Owens as president and CEO on November 15, 2005. Motorola filed suit over Zafirovski’s recruitment alleging violation of a non-disclosure agreement; Nortel settled by paying $11.5 million on his behalf. In 2006, Nortel resolved a class-action lawsuit accusing it of misleading investors about its financial condition by paying US$575 million plus issuing 629 million common shares.

Currie resigned from his EVP and CFO roles in early 2007. That February, Nortel announced plans to eliminate 2,000 positions while relocating another 1,000 jobs to lower-cost regions. The U.S. Securities and Exchange Commission filed civil fraud charges against Nortel related to accounting misconduct between 2000 and 2003 intended to meet internal targets and Wall Street expectations; Nortel settled these claims for $35 million and committed to enhancing its financial transparency.

In February 2008, the company declared further cuts of 2,100 jobs alongside transferring an additional 1,000 roles offshore; it also shuttered its Calgary campus in 2009. During third-quarter reporting that year, Nortel unveiled plans to reorganize into three vertically integrated divisions: Enterprise, Carrier Networks, and Metro Ethernet Networks. Four executive positions were eliminated effective January 1, 2009: Chief Marketing Officer Lauren Flaherty; Chief Technology Officer John Roese; Global Services President Dietmar Wendt; Executive Vice President Global Sales Bill Nelson. A net workforce reduction of approximately 1,300 employees was also announced. With its stock price falling below $1 per share, the New York Stock Exchange issued a warning that Nortel faced delisting unless its share price rose above $1 within six months. Amidst the economic downturn during the late-2000s recession, speculation about Nortel’s financial instability intensified; government requests for funding were denied.

There is speculation that industrial espionage along with counterfeit products from Asia accelerated Nortel’s decline; however, analysis by University of Ottawa professor Jonathan Calof and former executive Tim Dempsey attributes primary responsibility to strategic missteps and ineffective management within the company.

Creditor protection

On January 14, 2009, Nortel sought protection from creditors by initiating proceedings under Chapter 11 in the United States, under the Companies' Creditors Arrangement Act in Canada, and pursuant to the Insolvency Act 1986 in the United Kingdom. This made Nortel the first prominent technology firm to file for bankruptcy protection amid the 2008 financial crisis. The company faced an imminent interest payment of $107 million due the following day, which represented roughly 4.6% of its available cash reserves of about $2.3 billion. After the announcement, Nortel’s stock price plummeted more than 79% on the Toronto Stock Exchange. Export Development Canada agreed to provide short-term financing up to C$30 million through an existing credit facility, though officials refrained from describing this assistance as a bailout.

At first, Nortel intended to reorganize and emerge from bankruptcy, implementing a retention bonus program worth US$45 million aimed at retaining approximately 1,000 executives during the restructuring process. By late January 2009, Nortel had ceased operations in its WiMAX division and terminated its contract with Alvarion. Shortly thereafter, it sold its Layer 4–7 application delivery business to Israeli company Radware for $18 million, following Radware’s role as a stalking horse bidder. This application switch product line had originally been acquired by Nortel in October 2000 through its purchase of Alteon WebSystems.

Wind-up

As the recession deepened and stock markets declined—discouraging potential bids for Nortel’s assets—and with key customers reassessing their relationships, Nortel announced in June 2009 that it would not exit bankruptcy but instead liquidate all its business units. On June 26, 2009, Nortel shares were removed from the Toronto Stock Exchange at a value of $0.185 per share, a dramatic drop from their peak in 2000. CEO Mike Zafirovski resigned in August, and the board was downsized from nine members to three. During 2009, Nortel disbursed $14.2 million in executive cash compensation, paid $1.4 million to directors, and spent $140 million on legal and financial advisors managing the bankruptcy process.

Nokia Siemens Networks submitted a stalking horse bid of $650 million for Nortel’s CDMA and LTE assets; however, Ericsson ultimately won the auction with a bid of $1.13 billion. Avaya acquired Nortel’s Enterprise Solutions division for $900 million after initially offering $475 million. In November 2009, Ciena purchased Nortel’s Metro Ethernet Networks unit for $530 million in cash plus convertible notes; meanwhile, Ericsson and Kapsch jointly acquired Nortel’s GSM business for $103 million. Hitachi took ownership of the Next Generation Packet Core assets. In December 2009, former executive John Roth sought indemnification amounting to $1 billion from Nortel amid ongoing class action lawsuits.

In February 2010, Ernst & Young identified a $37 million deficit in Nortel’s Health and Welfare Trust that supported pensioners’ benefits. Subsequently, Nortel negotiated a $57 million settlement to terminate Canadian employee health benefits and proposed retention bonuses totaling $92.3 million for 1,475 employees within its Business Services and Corporate groups—allocating $27 million to Canadian personnel and $55 million to U.S.-based staff—with an additional $27 million approved later despite objections from the U.S. trustee.

In May 2010, GENBAND acquired Nortel’s Carrier VoIP and Application Solutions unit for approximately $100 million net of adjustments. Ericsson purchased Nortel’s stake in LG-Nortel for $242 million in June 2010 and later acquired the Multi-Service Switch division for $65 million in September. Public Works and Government Services Canada bought Nortel’s Ottawa Carling Campus in October 2010 for CAD$208 million to serve as headquarters for National Defence.

In December 2010, One Equity Partners and Rhea Investments acquired a 53.13% interest in Turkish company Nortel Netaş from Nortel for $68 million.

Nortel’s final significant asset—a portfolio of around 6,000 patents spanning wireless technologies (including 4G), data networking, optical systems, voice communication, Internet-related technologies, and semiconductors—was sold for $4.5 billion to a consortium comprising Apple, EMC, Ericsson, Microsoft, BlackBerry, and Sony pending court approval. Google had initially bid $900 million and subsequently raised offers exceeding $3 billion before being outbid.

In October 2011, Nortel’s UK subsidiary lost an appeal requiring payment of £2.1 billion into its underfunded pension scheme; meanwhile, its U.S. retirement plan is now administered by the Pension Benefit Guaranty Corporation.

A U.S. court sanctioned a claims settlement between Nortel’s American and European divisions in January 2014; nonetheless, litigation continued with renewed proceedings commencing in April 2016. Courts on both sides approved a creditor settlement in January 2017 that facilitated final bankruptcy closure and enabled distribution of roughly $7 billion to creditors.

Products

Nortel developed equipment and software focused on telecommunications, computer networks, and solutions tailored for corporate clients and communication providers, including landline, mobile, and cable television sectors. Their technology portfolio encompassed voice communication devices, fiber optic systems, wireless local area networks, and multimedia applications.

Notable historical products included:

Telephone Systems Telephone sets and terminals LAN and MAN equipment
Application Server 5200 alongside the Application Server 5300 (AS5300) Digital Nortel business phones designed for Meridian and Norstar platforms Baystack and ERS (Ethernet Routing Switch) series of managed network switches; examples include ERS-8600, ERS-8300, ERS-5600, ERS-5500, ERS-4500, ERS-2500
Large-scale digital carrier phone switches from the Digital Multiplex System (DMS and SL-100 families) Home telephone models from Northern Electric Multiservice Switch (MSS) lineup: MSS20000, MSS15000, MSS7400, MSS6400
Medium to large-scale PBX systems such as the Meridian 1 (SL-1) Additional Northern Telecom residential phone units Metro Ethernet Routing Switch 8600
Small to medium digital key telephone systems under the Meridian Norstar brand Payphone devices manufactured by Nortel Nortel Secure Network Access solutions including both hardware switches and software components
Medium to large-scale VoIP PBX systems marketed as Nortel Communication Servers: CS2100, CS2000, CS1500, CS1000 models Nortel IP Phone 1120E
Networking system known as Meridian Data (DV-1) by Parallan Computer Meridian M4020 terminals
SG-1 analog wired logic control PBX systems
SP-1 analog stored program control carrier switches
Routers Software Additional WAN hardware
Secure Router 1000 series: SR1004, SR1002, SR1001S, SR1001 models Visualization Performance & Fault Manager (VPFM) software suite 1 Mbit/s modem devices
Secure Router 3120 units Nortel Enterprise Switch Manager S/DMS SONET equipment
Secure Router 4134 File and Inventory Management software by Nortel OPTera Long Haul transmission systems
Secure Router 8000 series comprising SR8002, SR8004, SR8008, SR8012 models Nortel Multi-link Trunking Manager software tools
VPN routers including models 1750, 2700, 2750, and 5000 series Nortel Multicast Manager platform
Speech Server by Nortel
Passport Carrier Release software package
Routing Manager from Nortel
Security Manager software by Nortel
VLAN management tools by Nortel
DiamondWare 3D Voice Platform technology
Unified Communications Management provided by Nortel
Agile Communication Environment framework

Legal and accounting fees

In 2016, it was revealed by the Canadian Broadcasting Corporation that legal and accounting professionals were compensated a total of CAD 2.5 billion from Nortel’s bankruptcy estate.

Case of Kathleen Peterson

In 2001, Kathleen Peterson, who served as Nortel’s director of information services, was discovered deceased in her residence located in Durham, North Carolina. During a period of significant layoffs at Nortel, her family indicated she was concerned about job security. Prosecutors suggested this concern motivated her husband, Michael Peterson, to allegedly murder her to collect a $1.3 million life insurance payout—partially funded by Nortel—and to address their joint credit card debt amounting to $143,000.

Environmental liabilities

After declaring bankruptcy, Nortel's estate was confronted with environmental remediation claims totaling CAD 300 million. These claims related to contamination at various locations such as Belleville, Brockville, Kingston, and London.

Cyber intrusions

In September 1991, Julian Assange was apprehended for unauthorized access to Nortel’s master terminal located in Melbourne.

In 2001, Nortel discovered counterfeit products circulating in China but opted not to take action. Brian Shields, the former chief security officer, disclosed that in 2004 hackers based in China infiltrated Nortel’s networks, acquiring executive login credentials and seizing control of multiple computers. Despite internal alerts in 2008 about advanced malware tied to Chinese IP addresses and discussions on Mandarin-language forums, top executives dismissed these warnings. CEO Mike Zafirovski publicly expressed doubts regarding the reported security breach.

Nortel attempted to enlist help from the Royal Canadian Mounted Police but was unsuccessful; Canadian Security Intelligence Service reportedly approached Nortel for cooperation but was declined. Allegations suggest Nortel failed to inform prospective buyers such as Avaya and Genband about the compromised systems they were acquiring. Avaya took remedial measures after becoming aware of the issue.

Although some cybersecurity professionals question the extent of the breach described by Shields, industry insiders speculate that companies like Huawei and ZTE may have indirectly benefited from the cyberattack. Shields stops short of directly implicating Huawei but advises caution when engaging in partnerships with them due to these associations.

2003

On February 16, 2003, the Winnipeg Sun criticized the Canadian federal government for providing support to what it termed the "mega-failure" Nortel through Export Development Canada (EDC). Walter Robinson from the Canadian Taxpayers Federation condemned this aid as "the worst form of corporate welfare," emphasizing that Canadians who suffered billions in stock losses might face additional tax burdens to sustain the company.

2009

The EDC agreed to extend up to million in short-term financing through a pre-existing bonding facility previously accessible to Nortel. The Canadian government deliberately avoided referring to this assistance as a bailout.

Mismanagement of Health and Welfare Trust funds

Allegations emerged concerning financial misconduct within Nortel's Health and Welfare Trust (HWT). Financial analyst Diane Urquhart testified before a parliamentary committee that $100 million is unaccounted for from the HWT, alongside an outstanding $37 million loan owed by Nortel. The HWT, which was not registered as a formal trust, provided benefits including medical, dental, life insurance, long-term disability coverage, survivor income, and pension transition support.

Until 2005, Nortel fully financed disability insurance under the HWT. Since then, it is alleged that both the HWT Governance Committees and trustee Northern Trust violated their fiduciary responsibilities by allowing over million to be diverted from the HWT for uses inconsistent with its intended purpose. As of March 1, 2012, Northern Trust continues acting as the disbursing agent for Canadian Nortel pensioners.

Accounting misconduct

In 2007, the U.S. Securities and Exchange Commission along with the Ontario Securities Commission filed charges against several former senior financial executives at Nortel, including Frank Dunn who was dismissed in 2004. Dunn had ascended from chief financial officer to CEO in November 2001. The SEC accused Dunn and three other officers of manipulating revenue figures through "bill and hold" schemes beginning "no later than September 2000." This fraudulent activity persisted for at least a year during John Roth’s tenure as CEO; however, Roth was not charged.

Treatment of Nortel pensioners

On June 23, 2010, the News and Observer reported that Nortel petitioned a federal court to discontinue medical, prescription drug, long-term disability, and life insurance benefits for approximately 4,000 retirees and their dependents. The company cited monthly expenses of $2 million as the reason for this move, attributing the decision to pressure from creditors.

Ex-CEO as creditor

In the mid-2000s, former employees initiated class-action lawsuits against John Roth and others, accusing them of misleading representations regarding Nortel’s financial condition that impacted their 401(k) investments. In 2009, Roth submitted a claim valued at $1 billion to join other employees as a creditor in the event these lawsuits were successful.

Conflicts of interest

At Nortel’s 2002 annual shareholders' meeting held in Halifax, several shareholders, including Robert Verdun, expressed concerns over potential conflicts arising from non-arm’s-length dealings. A notable example involved director Yves Fortier, who simultaneously provided legal counsel to Nortel while serving on its board. Additionally, auditors Deloitte & Touche LLP earned $15 million for services unrelated to auditing.

Headquarters bugging

In 2013, during the conversion of the former Nortel headquarters for use by the Department of National Defence, electronic surveillance devices were uncovered. These outdated and inactive bugs led Canadian intelligence agencies to determine that the original target had been Nortel itself rather than the DND.

Headquarters

During its wind-down phase, Nortel shifted its corporate headquarters to 5945 Airport Road in Mississauga, Ontario.[1] Former headquarters locations included 60 Moodie Drive in Ottawa (currently NDHQ Carling), 8200 Dixie Road in Brampton, Ontario (which was sold to Rogers Communications in 2006 and is now known as Rogers Park), and 195 The West Mall in Toronto, Ontario (later occupied by SNC-Lavalin).[2]

Global worksites, partners, and customers

Nortel expanded into the United States market in 1971 and ultimately operated more than 100 sites across the country. These included research and development, software engineering, and sales offices located in states such as California, Florida, Georgia, Illinois, Maryland, Massachusetts, North Carolina, Texas, and Virginia. Its comprehensive R&D hubs were situated in Ottawa (Carling Campus headquarters), Beijing, and Guangzhou. Canadian research facilities also existed in Montreal, Belleville, and Calgary. Key U.S. R&D centers were found in Research Triangle Park (North Carolina), Richardson, Billerica, and Santa Clara.

Nortel maintained significant operations throughout Europe, the Middle East, Africa, the Caribbean, and Latin America. In Asia, it provided network infrastructure and communication solutions across mainland China, Hong Kong, Taiwan, South Korea, Japan, Singapore, Thailand, Malaysia, India, Pakistan, Australia, New Zealand, and Turkey. The company held a majority stake of 53.17% in Nortel Netaş, initially established as a joint venture with Turkish PTT dating back to 1967. Additionally, Nortel managed three joint ventures within China including Guangdong Nortel Telecommunications Equipment (GDNT), which operated full-service R&D facilities there.

Organizational framework

At the beginning of 2010, Nortel Networks had 1,637 employees in Canada covered by its benefit plan, alongside another 982 working at Nortel Technology. In February 2008, the total worldwide workforce was around 32,550, with approximately 6,800 based in Canada and 11,900 in the United States. Nortel's business was divided into four primary segments:

  • Carrier Networks (CN): Solutions for mobility networking encompassing CDMA, GSM, UMTS technologies; as well as circuit and packet-based carrier network infrastructure.
  • Enterprise Solutions (ES): Networking products designed for enterprises, including voice communications, data services, security features, multimedia messaging and conferencing systems, plus call center solutions.
  • Metro Ethernet Networks (MEN): Optical networking and metropolitan area network services tailored for both carriers and enterprise customers.
  • Global Services (GS): Services related to network deployment, support, management, and applications such as web services.

Corporate leadership

On October 3, 2012, all members of Nortel’s board of directors along with the remaining executive officers stepped down. During the company’s dissolution phase, a court order empowered Ernst & Young Inc., acting as the court-appointed monitor overseeing Nortel’s creditor protection process, to assume authority typically held by the board.

Previous board members

  • Jalynn H. Bennett, CM
  • Dr. Manfred Bischoff
  • James Blanchard
  • Robert Ellis Brown
  • Frank C. Carlucci, former chairman
  • John Cleghorn
  • Frank Dunn
  • Yves Fortier
  • Hon. James B. Hunt Jr.
  • Robert Alexander Ingram
  • Kristina M. Johnson
  • John Alan MacNaughton
  • Hon. John P. Manley
  • Richard David McCormick
  • Claude Mongeau
  • William Owens (Admiral)
  • Harry Jonathan Pearce, former chairman
  • David Richardson, former chairperson
  • John Andrew Roth
  • Guylaine Saucier
  • Sherwood Smith
  • John D. Watson
  • Lynton "Red" Wilson, former chairman
  • Mike Zafirovski, former president and CEO


Former executives

  • Edward Fleetford Sise, President of Northern Electric Company (1914–1919)
  • Paul Fleetford Sise, President of Northern Electric Company (1919–1948)
  • Ralph Holley Keefler, President of Northern Electric Company (1948–1964)
  • Vernon Oswald Marquez, President (1967–1971)
  • John C. Lobb, President (1971–1974)
  • David G. Vice, President and COO
  • Walter Frederick Light, President of Northern Telecom (1974–1982)
  • Edmund B. Fitzgerald, President (1982–1989)
  • Paul G. Stern, CEO (1989–1992)
  • Jean Monty, President
  • Roy Merrills, President
  • John Roth, President, CEO and chairman (1997–2001)
  • Frank Dunn, President and CEO (2001–2004)
  • Bill Owens, President and CEO (2004–2005)
  • Mike S. Zafirovski, President and CEO (2005–2009)

Related topics

Sources


External links

  1. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named NortelCanadaOffices
  2. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named WestMall
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