Nortel reports second quarter financial results... does anyone still care?

Posted by Darren Anderson

I know what you’re thinking – Is the new guy on Techvibes really going to start things off by writing a post on the fallen beast that is Nortel? Yes, as a matter of fact I am.

On Friday, Nortel announced its financial results for the second quarter of its 2010 fiscal year. The numbers weren’t pretty, but they also were not surprising given what remains after it auctioned off most of its major assets last year. Year-over-year sales were down approximately 81 per cent to US$145 million, and losses for the quarter amounted to US$1.5 billion. 

Don’t get me wrong, I do not condone the borderline or flat-out unethical behaviour that led to the black-eye on Nortel’s brand, and I really do feel for the pensioners that are likely out of luck now that nearly all of the company’s major assets have been sold off to the highest bidder. However, I cannot help but wonder what would have happened if someone (perhaps the Federal Government) would have stepped in and supported the falling tech giant in some way.

To put some perspective around this, according to The Globe and Mail’s most recent ranking of Canada’s 1000 largest public companies, only 33 public Canadian companies generated in excess of $10 billion in revenue in 2009. Among this group of companies are household names such as Royal Bank of Canada, Bombardier, Thomson Reuters and current Canadian technology star Research In Motion. These companies are the cream of the crop when it comes to Canadian business and I find it extremely hard to believe that if any of them were in financial difficulty and teetering on the brink of bankruptcy that the federal government would sit back and watch them collapse.

Just a few years ago Nortel was part of this elite group of Canadian industry leaders, but when times got tough it was left to fend for itself. I’m not suggesting that these elite companies should have a government safety net to fall back on, and I do realize that Nortel essentially made its own bed, but I think it would have made sense to use some of the billions in stimulus money that was doled out throughout this country over the past year or two to help preserve this company’s technology and ensure that for years to come it remained Canadian.

To date, the company was able to preserve approximately 13,000 jobs through the divesture of its operations, but what about the 15,000-20,000 former employees that are now out of work in what has to be one of the most difficult job markets in Canadian history?

I can continue on with the what if’s all day, and that’s the disappointing part – we will never know what would have happened if some sort of action would have been taken. Instead, what we do know is that Canada’s tech industry has lost one of its founding members, and one of the most innovative organizations in this country’s history.

Although the drum may have been beaten to death on this topic, what are your thoughts on Canada’s actions, or lack thereof, as Nortel fell from technology greatness? 

Company:
Nortel
Website:
http://www.nortel.com
Location:
Toronto, Ontario, Canada

Hundreds of millions of people, Fortune 500 companies, and government institutions around the world trust their networks to Nortel's reliable and secure solutions. Nortel is a recognized leader in delivering communications capabilities that make the promise of Business Made Simple a reality for our customers. Our next-generation technologies, for both service provider and enterprise networks, support multimedia... more


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Darren Anderson

Darren Anderson

Darren Anderson is a research analyst at Branham Group Inc., a leading industry analyst and strategic consulting firm servicing the global information technology marketplace. Each year he coordinates the Branham300, an annual ranking of the top 300 Canadian technology companies, allowing him to keep tabs on the happenings within Canada’s Information and Communication Technology industry. Beyond... more



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