Nortel’s Demise January 15, 2009Posted by Andre Vellino in Collaborative filtering.
I worked for Nortel (Bell Northern Research) for 13 years. At least 6 of these years rank among the best in my career (actually, my work right now ranks as the best, and I’m not just saying that because my employer might be reading my blog). The BNR Computing Research Lab had an amazing bunch of bright people – it was a real privilege to work with them. You’d hear the same testimonials about the BNR design group “Design Interpretive”.
So everyone is mourning Nortel’s demise into bankrupcy and offering post-mortem explanations. Here’s mine: the beginning of the end was BCE’s divestiture of Nortel on Jan. 26 2000, which was the culmination of John Roth’s “internet gamble” (viz. Nortel’s acquisition of the IP router company Bay Networks).
At the time, this move by BCE- to dump its remaining 38% ownership of Nortel onto the stock market – was touted as desirable both for Nortel and BCE. Nortel was to unteather itself from the schackles of a bureaucratic, stodgy telephone operating company, to be nimble and agile as “internet companies” need to be….
But it was pretty clear, even at that time, that this pact with Wall Street was a pact with the devil. No doubt there were significant rewards for senior managers and executives who were big shareholders, but at the cost of slavery to the quartely bottom line and hence to the ability to plan and execute for the long term.
If BCE had remained the princpal shareholder for Nortel, I think it wouldn’t have experienced the tsunami of the dot-com bubble-burst and also (probably) wouldn’t be suffering from the consequences of subsequent accounting scandals.