Nortel hangs on – just
The once mighty Canadian telco company Nortel announced that it would axe a further 1,900 jobs as part of its ongoing and seemingly fruitless effort to turn the company around. Nortel has suffered a massive series of insurmountable setbacks over the last few years since posting an astonishing $19.2 billion write-off six years ago.
Since then Nortel has consistently, quarter on quarter reneged on producing a set of accounts that could represent the business and would be signed off by auditors. The company has seen it’s stock price fall from an early 2000 peak of $140 only to collapse to its current $2.1 – the news saw Nortel shares drop another 3%.
What’s to be done with Nortel then? Is there any way it can climb out of the rut it seems to have got itself into. Well CEO Mike Zafirovski has been trying to tackle the underlying issues at Nortel and root out the markets it should stay in, in order to survive. This has meant cutting back on R&D and exiting markets where Nortel has smaller market share, or isn’t in the top three.
Nortel has been a wasteland for execs and has more than its share of board level intrigue, infighting and firings over the last six years. Even Zafirovski’s hiring was cursed, the company was sued by his former employee Motorola, an out of court settlement of $11.5 million dollars and an agreement not to share Motorola company secrets was eventually worked out – so not a great start.
As late as April this year, Nortel was still having to reinstate its earning to the market after publishing its – final definitive – in March.
That’s a real problem, because the only obvious way out of the mess is to buy out the company and split (or spit) out its various parts – but who would be able to buy the company when no one, especially Nortel can agree what’s going on in the books.
Sacking people, closing down lines and exiting markets is all very well and macho, but this only helps when you know what the numbers are. Nortel’s stock will probably increase significantly if it can ever publish reliable accounts.
Source
Nortel to cut 1,900 more jobs Toronto Star