Nortel Insider – by Desk Jockey

The view from one Desk Jockey

A few thoughts on Nortel and insolvency

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monopoly-bankruptcy-concernsEver since it was revealed last week that Nortel was exploring bankruptcy options there has been much discussion, both internally at the company amongst concerned employees, and externally at sites like AAN. Understandably there is much anger, shock and dismay at these events, especially since Nortel had previously stated it is viable in the long term and was strengthening its position.

There are a few issues that people keep bringing up and we hope to dispel some of the myths concerning them.

  1. Who leaked the story to the WSJ? Shouldn’t we find out who they are and make sure they are punished for disclosing company secrets in an obvious attempt to damage Nortel’s reputation and its stock price?

    What is important is not who leaked the story but rather that there is even a story in the first place.  When employees had earlier asked the executive about this very issue, the response was mum and dismissive, as it has always been for questions about serious issues affecting the entire company. 

    The fact that many in the leadership position seem to have been more concerned by the coverage of the story rather than the actual story itself, speaks volumes about their intent.  It only reinforces the notion that they are more worried about perception rather than fact.  Employees must trust their leadership in order to do their jobs effectively and it is hard to have trust when they are treated as incapable of handling the truth.

  2. Isn’t this just Nortel being cautious and preparing for all possibilities? After all, isn’t this the prudent course of action given the current economic crisis?

    This is the counter argument most often heard when trying dismiss the WSJ story.  After all, just because one buys life insurance, it doesn’t necessarily mean that one believes one’s death is imminent, right?

    Unfortunately, this is a flawed analogy.  Buying life insurance and seeking bona fide legal counsel/advice on bankruptcy options are two very different situations and comparing them is like comparing the purchase of a doll house to an actual house, to use yet another analogy.  One does not see companies like Apple or Microsoft pursuing such courses of action even in the current economic climate.

    Furthermore, the solicitation of legal advise concerning bankruptcy is no trivial or everyday matter, as some have made it out to be.  It is a costly, time consuming process that is only undertaken when the possibility is real enough to warrant such an extensive procedure.

  3. Nortel has responded to these negative news stories by saying they are a “viable partner for the long term,” and has continued to reiterate its commitment to reducing cost.  Doesn’t this mean anything that the company is being so forthright?

    Unfortunately, Nortel has been losing credibility ever since the accounting scandals of the early 2000’s perpetrated by the criminal Frank Dunn.  The current executive leadership rose to power by promising a change from the old ways and a commitment to integrity, however they have faltered during key events.  

    All of this has had the effect of further diminishing credibility.  With the release of this latest story, we have found out that the leadership has been telling employees and shareholders one thing, while doing another.  With this kind of track record, it is unfortunately hard to believe the written word, and every statement is taken with a grain of salt.  Only time (and the release of the FY2008 earnings in February) will tell the true story.

Please don’t hesitate to share your ideas concerning these topics.  Active discussion is needed for the healthy functioning of a company such as Nortel.

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Written by Desk Jockey

December 15, 2008 at 7:30 pm

Posted in Uncategorized

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