Nortel

Nortel was a Canadian telecommunications and data-networking equipment manufacturer whose origins reached back to the creation of the Northern Electric and Manufacturing Company in Montreal in 1895. It grew out of Bell Canada’s manufacturing operations and initially produced telephones, switchboards, cables, alarm equipment and other electrical goods. For much of its early history, the company operated within a North American telephone-equipment ecosystem shaped by Bell Canada and Western Electric, manufacturing equipment under licensing and corporate relationships connected to the Bell System. The company became Northern Electric Company in 1914 and broadened its activities during the twentieth century. Its product range at different times included telephone infrastructure, radio equipment, television sets, consumer electrical appliances, military communications equipment and industrial electronics. The company was affected severely by the Great Depression, but later benefited from postwar telecommunications expansion. In 1949, an antitrust settlement required AT&T and Western Electric to reduce their ownership interest, helping set the stage for Northern Electric’s eventual development of a more independent research and product strategy. During the 1950s through the 1970s, Northern Electric invested increasingly in electronic switching, semiconductors, digital communications and fiber-optic research. Its name changed to Northern Telecom Limited in 1976, reflecting a strategic emphasis on digital telecommunications. The DMS family of digital central-office switches became one of its most important commercial lines and helped the company expand internationally, particularly after the breakup of the American telephone monopoly in the 1980s. Through Bell-Northern Research, jointly associated with Bell Canada and Northern Telecom, the business also developed significant research capabilities in switching, wireless communications, optical transmission and computing. The brand adopted the shorter name Nortel for its centenary in 1995. After acquiring Bay Networks in 1998, it became Nortel Networks, signaling an attempt to compete across broader data-networking and communications markets rather than only traditional telephone infrastructure. During the late-1990s telecommunications boom, Nortel became one of the world’s most valuable technology companies. It expanded through acquisitions, pursued optical networking aggressively and employed tens of thousands of people worldwide. Its market value, however, became closely tied to expectations for rapid growth in Internet infrastructure. The collapse of the telecommunications and Internet investment boom exposed excess capacity, declining equipment prices and dependence on major customers such as WorldCom. Nortel undertook extensive layoffs, asset writedowns and restructuring. The company also became involved in a major accounting restatement and executive-compensation controversy after an internal review found that revenue and liabilities had been recorded improperly across several years. These events damaged confidence in the company and added to the effects of the broader telecommunications downturn. Nortel survived for several years through restructuring, asset sales and changes in management, but its financial position continued to deteriorate. In January 2009 it sought creditor protection in Canada and the United States, beginning the largest corporate insolvency proceeding in Canadian history. The company sold major businesses and intellectual-property assets, including its wireless, enterprise-networking and optical assets, to buyers such as Ericsson, Avaya, Ciena and a consortium led by Apple, EMC, Ericsson, Microsoft, BlackBerry and Sony. Courts approved a negotiated settlement of the Canadian and US bankruptcy proceedings in 2017. Nortel no longer operates as an independent telecommunications-equipment manufacturer, although its patents and former technologies continue to influence later communications products and standards.

Nortel began in Montreal in 1895 as the Northern Electric and Manufacturing Company, created when Bell Telephone Company of Canada separated its manufacturing arm. The new business produced telephones and related equipment for Canadian and external customers. It expanded through the acquisition of cable-manufacturing operations and merged with Imperial Wire and Cable in 1914 to form Northern Electric Company. Its Montreal manufacturing plant became a major center of Canadian electrical production. The company diversified during the first half of the twentieth century. In addition to telephone hardware and switchboards, it made cables, radio equipment, electrical appliances, television sets and specialized military communications products. It suffered a major contraction during the Great Depression, when sales and employment fell sharply. After the Second World War, the expansion of telephone networks and the development of electronics gave Northern Electric new opportunities. A major structural change followed the 1949 antitrust settlement involving AT&T and Western Electric. Northern Electric gradually moved toward greater technological independence, while Bell Canada remained an important shareholder. It developed television and electronic products in the 1950s, created research capabilities in fiber optics and digital communications during the 1960s, and expanded into the United States. In the early 1970s, Bell Canada and Northern Electric became equal partners in Bell-Northern Research, which became a central source of communications innovation. The company changed its name to Northern Telecom in 1976 and focused its strategy on digital communications. Its DMS digital switching systems became a core commercial success and helped establish the company as a large international supplier. Deregulation and the 1984 breakup of AT&T opened additional opportunities in the United States. Northern Telecom also entered computer networking and acquired US technology businesses as it sought to move beyond conventional telephone equipment. In 1995 the company adopted Nortel as its principal brand. It acquired Bay Networks in 1998 and changed its corporate name to Nortel Networks. The late 1990s brought explosive demand for fiber-optic and Internet infrastructure. Nortel acquired optical-networking companies, expanded production and reached an extraordinary stock-market valuation. The boom proved unsustainable: carriers accumulated excess capacity, equipment prices declined, and the collapse of major customers intensified the downturn after 2000. Nortel responded with workforce reductions, business disposals and a large-scale restructuring under Frank Dunn. The company later disclosed accounting problems involving the timing and classification of revenue and liabilities. Senior executives were removed or required to return bonuses, and the episode led to regulatory and investor scrutiny. Although Nortel returned briefly to reported profitability and continued to sell communications technology, it never regained its former scale or valuation. After further losses and restructuring, Nortel sought creditor protection in January 2009. Its businesses and intellectual property were divided among multiple buyers. Ericsson acquired major wireless-network assets, Avaya acquired enterprise assets, Ciena acquired optical-network assets, and a consortium purchased a large patent portfolio. The remaining corporate structure was wound down, and courts approved a final negotiated settlement in 2017. Nortel is therefore a defunct brand and former corporation, remembered for its role in Canadian industrial development, digital switching, optical networking and wireless communications.

• 2017

  Bankruptcy settlement approved

  [1]Nortelen.wikipedia.org

  Courts approved a negotiated settlement of the principal bankruptcy proceedings.

• 2009

  Creditor protection filed

  [1]Nortelen.wikipedia.org

  Nortel entered insolvency proceedings in Canada and the United States.

• 1998

  Bay Networks acquired

  [1]Nortelen.wikipedia.org

  The acquisition broadened the company’s position in enterprise and data networking.

• 1995

  Nortel brand introduced

  [1]Nortelen.wikipedia.org

  The shortened Nortel identity was adopted around the company’s centenary.

• 1976

  Renamed Northern Telecom

  [1]Nortelen.wikipedia.org

  The company adopted Northern Telecom Limited and emphasized digital telecommunications.

• 1949

  Western Electric ownership reduced

  [1]Nortelen.wikipedia.org

  A US antitrust settlement changed Northern Electric’s ownership and commercial relationships.

• 1914

  Northern Electric Company formed

  [1]Nortelen.wikipedia.org

  Northern Electric and Imperial Wire and Cable merged.

• 1895

  Northern Electric and Manufacturing Company incorporated

  [1]Nortelen.wikipedia.org

  Bell Canada separated its manufacturing operations into a new company in Montreal.

Historically positioned as a global communications-technology leader spanning carrier networks, digital switching, optical transmission, wireless infrastructure and enterprise networking.

• Carrier telecommunications · 1977

  DMS digital switching systems

  The DMS family was Nortel’s signature digital telephone-switching platform. It supported central-office and network switching functions and became a major source of revenue for many years. The line helped Nortel transition from electromechanical telecommunications equipment to software-controlled digital infrastructure and supported its expansion into international carrier markets.

• Optical communications

  Optical networking systems

  Nortel supplied equipment for high-capacity fiber-optic transmission and long-distance carrier networks. The company invested heavily in optical technology during the Internet infrastructure boom, including long-haul systems obtained through acquisitions. These products were strategically important but were also exposed to the post-2000 collapse in carrier capital spending.

• Wireless telecommunications

  Wireless network infrastructure

  Nortel developed and sold infrastructure used by mobile operators, including wireless access and core-network equipment. Wireless became one of the company’s most important later businesses, but the assets were ultimately sold during the insolvency process as Nortel exited the market.

• Data networking · 1998

  Enterprise networking products

  Following the Bay Networks acquisition, Nortel offered switches, routers and related enterprise networking technologies. This portfolio was intended to position the company in corporate data networks as well as carrier infrastructure. Enterprise assets were later sold during the bankruptcy proceedings.

• 2003

  Accounting restatement and executive bonus controversy

  Nortel disclosed that liabilities and revenue had been recorded improperly across several reporting periods. The company restated accounts, removed senior executives and reported that some executives returned bonuses linked to erroneous results. The matter damaged investor confidence and generated substantial external audit and consulting costs.

  Source

Read more

• 2009

  Filing for creditor protectionOther

  Background

  Nortel faced declining demand, heavy losses, debt pressure and the continuing effects of the telecommunications-market collapse.

  Action taken

  Nortel sought protection under Canadian and US insolvency laws and began selling businesses and intellectual property.

  Aftermath

  The company was broken apart through asset sales and ultimately ceased operating as an independent telecommunications manufacturer.

  Source

• 1998

  Acquisition of Bay NetworksM&A

  Background

  Nortel sought to expand from carrier telecommunications into enterprise and data networking.

  Action taken

  The company acquired Bay Networks and changed its corporate name to Nortel Networks.

  Aftermath

  The transaction broadened Nortel’s technology portfolio but also increased its exposure to the competitive networking market.

  Source

• 1976

  Shift toward a fully digital telecommunications portfolioStrategy

  Background

  Electronic switching and digital communications were becoming central to the modernization of telephone networks.

  Action taken

  Northern Telecom reoriented its business around digital products and promoted the Digital World portfolio, including DMS switching.

  Aftermath

  The strategy produced a long period of growth and established DMS as a major carrier platform.

  Source

1. 1Nortelen.wikipedia.org