Canadian telecom equipment giant, Nortel Networks, has obtained bankruptcy protection from an Ontario Superior Court judge, in a bid to avoid ongoing debt repayments which continue to erode its cash reserves.
Nortel vows to keep itself alive, however, by selling off key assets to pay off debt, and reducing its 30,000-member global workforce. It also plans to continue promoting itself by sponsoring the 2010 Winter Olympics in Vancouver and 2012 Summer Olympics in London.
But BBN analyst, Michael Kane, predicted yesterday that Nortel would not survive in its current form.
“Although there is a great deal of equity in the company the possibility of it staying together as the Nortel Networks we knew is fairly slim,” Kand said, noting that “we’re likely going to see it sold off in bits and pieces.”
Nortel CEO, Mike Zafirovski, meanwhile, said that the bankruptcy filing was imperative for the company’s survival.
“There are very significant changes happening in a very large industry, we refer to this as the world of hyper-connectivity,” Zafirovski said. “These actions are imperative so that Nortel can build on its core strengths and become the highly focused and financially sound leader in the communications industry that its people, technology and customer relationships show it ought to be.”
The company expects its day-to-day operations to continue without interruption during the current restructuring process.
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