and Canada approved a negotiated settlement of bankruptcy proceedings in 2017. == History == === Origins === Alexander Graham Bell conceived the technical aspects of the telephone and invented it in July 1874, while residing with his parents at their farm in Tutela Heights, on the outskirts of Brantford, Ontario.
The small manufacturing department expanded yearly with the growth and popularity of the telephone to 50 employees in 1888.
By 1890 it had been transformed into its own branch of operations with 200 employees, and a new factory was under construction. As the manufacturing branch expanded, its production ability increased beyond the demand for telephones, and it faced closure for several months a year without manufacturing other products.
It was founded in Montreal, Quebec, in 1895 as the Northern Electric and Manufacturing Company.
In 1895, the Bell Telephone of Canada spun off its manufacturing arm to build telephones for sale to other companies, as well as other products, such as fire alarm boxes, police street call boxes, and fire department call equipment.
The first general stockholders meeting was held on March 24, 1896. In December 1899, The Bell Telephone Company of Canada bought a cabling company for $500,000; a Canadian charter named it The Wire and Cable Company.
The first general stockholders meeting was held on March 24, 1896. In December 1899, The Bell Telephone Company of Canada bought a cabling company for $500,000; a Canadian charter named it The Wire and Cable Company.
Northern Electric and Manufacturing further expanded its product line in 1900, manufacturing the first Canadian wind-up gramophones that played flat discs.
In 1911 the Wire and Cable company changed its name to the Imperial Wire and Cable Company. === Northern Electric Company === The construction of a new manufacturing plant started in 1913 at Shearer Street in Montreal, Quebec, Canada, as preparations began for the two manufacturing companies' integration.
In 1911 the Wire and Cable company changed its name to the Imperial Wire and Cable Company. === Northern Electric Company === The construction of a new manufacturing plant started in 1913 at Shearer Street in Montreal, Quebec, Canada, as preparations began for the two manufacturing companies' integration.
Then, in January 1914, the Northern Electric and Manufacturing Company and the Imperial Wire and Cable Company merged into the Northern Electric Company, commonly known simply as Northern Electric, and the new company opened the doors on a new manufacturing plant in January 1915.
Then, in January 1914, the Northern Electric and Manufacturing Company and the Imperial Wire and Cable Company merged into the Northern Electric Company, commonly known simply as Northern Electric, and the new company opened the doors on a new manufacturing plant in January 1915.
The "Northern Electric Peanut tube was the smallest tube made, and drew only one-tenth of an ampere and was the most remarkable radio frequency amplifier ever made." During the 1920s Northern Electric made kettles, toasters, cigar lighters, electric stoves, and washing machines.
Later in the 1920s, Northern created the first talking movie sound system in the British Empire for a theater in Montreal. During the Great Depression in the 1930s, Northern Electric was affected, like most other companies.
History of the County of Brant: Illustrated With Fifty Half-Tones Taken From Miniatures And Photographs, Brantford, ON: Brant Historical Society, Hurley Printing, 1920.
In 1922, Northern started to produce, for $5, the "Peanut" vacuum tube, which required only a single dry-cell battery.
In January 1923, Northern Electric started to operate an AM radio station with call letters CHYC, in the Shearer Street plant, and much of the programming was religious services for the Northern Electric employees and families in the community.
In July 1923, CHYC-AM was the first radio station to provide entertainment to the riders of the transcontinental train, in a parlor car fitted with a radio set to receive the broadcast as it left Montreal and traveled west.
Later in the 1920s, Northern created the first talking movie sound system in the British Empire for a theater in Montreal. During the Great Depression in the 1930s, Northern Electric was affected, like most other companies.
From the beginning of 1930 through the end of 1933, sales dropped from $34 million to $8.2 million, and the number of employees dropped from 6,100 to 2,400. === Independence from Western Electric === In 1949, an antitrust suit in the U.S.
From the beginning of 1930 through the end of 1933, sales dropped from $34 million to $8.2 million, and the number of employees dropped from 6,100 to 2,400. === Independence from Western Electric === In 1949, an antitrust suit in the U.S.
From the beginning of 1930 through the end of 1933, sales dropped from $34 million to $8.2 million, and the number of employees dropped from 6,100 to 2,400. === Independence from Western Electric === In 1949, an antitrust suit in the U.S.
AT&T spun off Northern Electric in 1956.
Also in 1969, Northern began making inroads into the U.S.
In 1972, it opened its first factory in the U.S.
The product line was branded "Digital World" and included the well known DMS-100, a fully digital central office switch serving as many as 100,000 lines, which was a key contributor to the company's revenue for close to 15 years. Starting in 1977, Nortel grew rapidly after the introduction of its DMS line of digital central office telephone switches, especially after the AT&T breakup in 1984.
Northern Telecom became a significant supplier in Europe and China and was the first non-Japanese supplier to Nippon Telegraph and Telephone. === Deregulation === In 1983, due to deregulation, Bell Canada Enterprises (later shortened to BCE) was formed as the parent company to Bell Canada and Northern Telecom.
The product line was branded "Digital World" and included the well known DMS-100, a fully digital central office switch serving as many as 100,000 lines, which was a key contributor to the company's revenue for close to 15 years. Starting in 1977, Nortel grew rapidly after the introduction of its DMS line of digital central office telephone switches, especially after the AT&T breakup in 1984.
Rumours continued to persist of Nortel's poor financial health, amid the late 2000s recession, and its bids for government funds were turned down. === Liquidation === ==== Protection from creditors ==== On January 14, 2009, Nortel filed for protection from creditors, in the United States under Chapter 11 of the United States Bankruptcy Code, in Canada under the Companies' Creditors Arrangement Act, and in the United Kingdom under the Insolvency Act 1986.
Bell-Northern Research was gradually absorbed into Nortel, as it first acquired a majority share in BNR, and eventually acquired the entire company. In the late 1990s, stock market speculators, hoping that Nortel would reap increasingly lucrative profits from the sale of fibre optic network gear, began pushing up the company's share price to unheard-of levels despite the company's repeated failure to turn a profit.
Under the leadership of chief executive officer (CEO) John Roth, sales of optical equipment had been robust in the late 1990s, but the market was soon saturated.
When the speculative telecom bubble of the late 1990s reached its pinnacle late in the year 2000, Nortel was to become one of the most spectacular casualties.
Currie, previously the Chief Financial Officer (CFO) of the Royal Bank of Canada, was named CFO of Nortel in 2005, having previously served as Northern Telecom's CFO in the 1990s.
Ithaca, New York: Cornell University Press, 1990, . Reville, F.
His planned successor and chief operating officer (COO), Clarence Chandran, already on sick leave due to complications following his 1997 stabbing in Singapore, decided to quit, however.
Investigators ultimately found about $3 billion in revenue had been booked improperly in 1998, 1999, and 2000.
As a consequence of the stock transaction used to purchase Bay Networks, BCE ceased to be the majority shareholder of Nortel. In 1999, Nortel outsourced several of its manufacturing operations to North American contractors. In 2000, BCE spun out Nortel, distributing its holdings of Nortel to its shareholders.
Investigators ultimately found about $3 billion in revenue had been booked improperly in 1998, 1999, and 2000.
As a consequence of the stock transaction used to purchase Bay Networks, BCE ceased to be the majority shareholder of Nortel. In 1999, Nortel outsourced several of its manufacturing operations to North American contractors. In 2000, BCE spun out Nortel, distributing its holdings of Nortel to its shareholders.
When the speculative telecom bubble of the late 1990s reached its pinnacle late in the year 2000, Nortel was to become one of the most spectacular casualties.
Nortel's market capitalization fell from C$398 billion in September 2000 to less than C$5 billion in August 2002, as Nortel's stock price plunged from C$124 to C$0.47.
Roth was criticized after it was revealed that he cashed in his own stock options for a personal gain of C$135 million in 2000 alone. CEO John Roth retired in 2001.
The company stated that the restatement's principal effects would be a reduction in previously reported net losses for 2000, 2001, and 2002 and an increase in shareholders’ equity and net assets previously reported on its balance sheet.
Investigators ultimately found about $3 billion in revenue had been booked improperly in 1998, 1999, and 2000.
The Securities and Exchange Commission filed civil fraud charges against Nortel for accounting fraud from 2000 to 2003; the fraud was allegedly to close gaps between its true performance, its internal targets and Wall Street expectations.
Rumours continued to persist of Nortel's poor financial health, amid the late 2000s recession, and its bids for government funds were turned down. === Liquidation === ==== Protection from creditors ==== On January 14, 2009, Nortel filed for protection from creditors, in the United States under Chapter 11 of the United States Bankruptcy Code, in Canada under the Companies' Creditors Arrangement Act, and in the United Kingdom under the Insolvency Act 1986.
Nortel had acquired the application switch product line in October 2000 when it purchased Alteon WebSystems. ==== Wind-up ==== With the worsening recession and stock market decline deterring potential companies from bidding for Nortel's assets, and many of Nortel's major customers reconsidering their relationships with the restructuring company, in June Nortel announced that it no longer planned to emerge from bankruptcy protection, and would seek buyers for all of its business units.
After announcing it planned to sell off all of its assets, Nortel shares were delisted from the Toronto Stock Exchange on June 26, 2009 at a price of $0.185 per share, down from its high in 2000 when it comprised a third of the S&P/TSX composite index.
Beginning in at least 2000 they accessed documents including emails, technical papers, research, development reports, and business plans.
While unable to offer conclusive proof Shields stated that "When 2000 came along, then it was a downward slide.
According to the SEC, Dunn and three other financial officers began to fudge revenue by misusing "bill and hold" transactions starting "no later than September, 2000".
Roth was criticized after it was revealed that he cashed in his own stock options for a personal gain of C$135 million in 2000 alone. CEO John Roth retired in 2001.
Chief financial officer (CFO) Frank Dunn was eventually chosen as Roth's permanent replacement. === After the Internet bubble === ==== Accounting restatements ==== Frank Dunn presided over a dramatic restructuring of Nortel, which included laying off two-thirds of its workforce (60,000 staff) and writedowns of nearly US$16 billion in 2001 alone.
The company stated that the restatement's principal effects would be a reduction in previously reported net losses for 2000, 2001, and 2002 and an increase in shareholders’ equity and net assets previously reported on its balance sheet.
Roth as CEO in November 2001.
The bugs found were older and non-operational leading Canadian intelligence to draw the conclusion that the former tenant Nortel and not the future tenant MND was the target. === IP theft and knockoffs === In 2001 Nortel identified knockoff products circulating in the Chinese market, in which they did not compete.
Nortel's market capitalization fell from C$398 billion in September 2000 to less than C$5 billion in August 2002, as Nortel's stock price plunged from C$124 to C$0.47.
The company stated that the restatement's principal effects would be a reduction in previously reported net losses for 2000, 2001, and 2002 and an increase in shareholders’ equity and net assets previously reported on its balance sheet.
This had some initial perceived success in turning the company around, with an unexpected return to profitability reported in the first quarter of 2003.
In late October 2003, Nortel announced that it intended to restate approximately $900 million of liabilities carried on its previously reported balance sheet as of June 30, 2003, following a comprehensive internal review of these liabilities.
More than $2 billion was moved into later years, about $750 million was pushed forward beyond 2003 and about $250 million was wiped away completely.
The accounting scandal hurt both Nortel's reputation and finances, as Nortel spent an estimated US$400 million on outside auditors and management consultants to retrain staff. To improve its liquidity, in 2003 Nortel arranged a US$750 million credit support facility with Export Development Canada.
The Securities and Exchange Commission filed civil fraud charges against Nortel for accounting fraud from 2000 to 2003; the fraud was allegedly to close gaps between its true performance, its internal targets and Wall Street expectations.
How coincidental." === Government bailouts === ==== 2003 ==== On February 16, 2003, the Winnipeg Sun published an article criticising the Canadian Federal government for propping up "mega-loser Nortel" through Export Development Canada (EDC).
Walter Robinson of the Canadian Taxpayers Federation denounced the line of credit, calling it "corporate welfare at its worst." On April 28, 2004 amidst the accounting scandal, three of Nortel's top lieutenants—Douglas Beatty, CEO Frank Dunn and Michael Gollogly—were fired for financial mismanagement.
At the year's end, directors Lynton "Red" Wilson and John Cleghorn retired from the board. In 2004 Nortel discovered that hackers they believed to be in China had free rein within the Nortel network for more than a decade before their collapse.
Despite the original discovery in 2004 and the subsequent investigation that led to the rootkit detection in 2009, Nortel allegedly ignored the problem and failed to disclose it to potential buyers of its business.
Securities and Exchange Commission and the Ontario Securities Commission laid charges against former senior financial officials from Nortel including Frank Dunn who was fired from Nortel in 2004.
Nortel acquired PEC Solutions, a provider of information technology and telecommunications services to various government agencies and departments, in June 2005 and renamed it Nortel Government Solutions Incorporated (NGS).
Currie, previously the Chief Financial Officer (CFO) of the Royal Bank of Canada, was named CFO of Nortel in 2005, having previously served as Northern Telecom's CFO in the 1990s.
Zafirovski, who had served as president and CEO of GE Lighting and then as Motorola President and COO, succeeded Owens as president and CEO on November 15, 2005.
Nortel refused to comment on The Wall Street Journal report, but former CEO Mike Zafirovski, in charge between 2005 and 2009, claimed the company "did not believe it was a real issue". Shields alleged that the hacking may have benefited Chinese competitors such as Huawei and ZTE.
The HWT was an unregistered trust maintained by Nortel to provide medical, dental, life insurance, long-term disability and survivor income and pension transition benefits. Until 2005 Nortel fully funded the disability insurance in its HWT.
Nortel also paid out US$575 million and 629 million common shares in 2006 to settle a class-action lawsuit that accused the company of misleading investors about the company's health. Currie stepped down as Executive Vice President and CFO in early 2007.
Previous locations of its head offices include Brampton, Ontario (sold to Rogers Communications in 2006 and now known as Rogers Park, Brampton) and 195 The West Mall in Toronto (now used by SNC-Lavalin). === Global worksites, partners, and customers === Nortel expanded into the U.S.
Nortel also paid out US$575 million and 629 million common shares in 2006 to settle a class-action lawsuit that accused the company of misleading investors about the company's health. Currie stepped down as Executive Vice President and CFO in early 2007.
In February 2007, Nortel announced its plans to reduce its workforce by 2,000 employees, and to transfer an additional 1,000 jobs to lower-cost job sites.
However, it is alleged that since then, the HWT Governance Committees and third party trustee, Northern Trust, breached their fiduciary duties to protect Nortel's disabled employees and survivors of deceased employees by allowing Nortel to misdirect over million from the HWT for purposes inconsistent with the terms of the HWT. As of March 1, 2012, Northern Trust continues to act as the paying agent for Canadian Nortel pensioners. === Bookkeeping irregularities === In 2007, both the U.S.
Nortel settled the case, paying $35 million, which the Commission distributed to affected shareholders, and reported periodically to the commission on remedial measures to improve its financial accounting. Nortel announced plans in February 2008 to eliminate 2,100 jobs, and to transfer another 1,000 jobs to lower-cost centres.
As part of the reductions, Nortel shut down its Calgary campus in 2009. During its reporting of third quarter 2008 results, Nortel announced it would restructure into three vertically-integrated business units: Enterprise, Carrier Networks, and Metro Ethernet Networks.
creditors. In February 2010, Ernst & Young, the court-appointed monitor of Nortel's Canadian bankruptcy proceedings, reported that the assets of Nortel's Health and Welfare Trust had a shortfall of $37 million in its net assets as of December 31, 2008.
As part of the reductions, Nortel shut down its Calgary campus in 2009. During its reporting of third quarter 2008 results, Nortel announced it would restructure into three vertically-integrated business units: Enterprise, Carrier Networks, and Metro Ethernet Networks.
As part of the decentralization of its organization, four executive positions were eliminated, effective January 1, 2009: Chief Marketing Officer - Lauren Flaherty; Chief Technology Officer - John Roese; Global Services President - Dietmar Wendt; and Executive Vice President Global Sales - Bill Nelson.
Rumours continued to persist of Nortel's poor financial health, amid the late 2000s recession, and its bids for government funds were turned down. === Liquidation === ==== Protection from creditors ==== On January 14, 2009, Nortel filed for protection from creditors, in the United States under Chapter 11 of the United States Bankruptcy Code, in Canada under the Companies' Creditors Arrangement Act, and in the United Kingdom under the Insolvency Act 1986.
At the end of January 2009, Nortel announced that it would be discontinuing its WiMAX business and its agreement with Alvarion.
After announcing it planned to sell off all of its assets, Nortel shares were delisted from the Toronto Stock Exchange on June 26, 2009 at a price of $0.185 per share, down from its high in 2000 when it comprised a third of the S&P/TSX composite index.
Nortel handed out $14.2 million in cash compensation to seven executives in 2009.
As insurance against judgments in class action lawsuits filed by former employees, John Roth filed in December 2009 for a US$1 billion indemnification from Nortel, joining the list of U.S.
The breach was not properly addressed by the time the company filed for bankruptcy in 2009.
Hackers working from Chinese IP addresses had allegedly used seven passwords of Nortel executives, including a former CEO, to penetrate networks owned by the company. Brian Shields, a former senior systems security advisor for Nortel, led an internal investigation into the breach and exposed rootkit software on at least two machines in 2009 that allowed hackers to control them remotely and monitor email.
Despite the original discovery in 2004 and the subsequent investigation that led to the rootkit detection in 2009, Nortel allegedly ignored the problem and failed to disclose it to potential buyers of its business.
Nortel refused to comment on The Wall Street Journal report, but former CEO Mike Zafirovski, in charge between 2005 and 2009, claimed the company "did not believe it was a real issue". Shields alleged that the hacking may have benefited Chinese competitors such as Huawei and ZTE.
Mr Robinson was appalled that Canadians who already lost billions on Nortel on the stock market would be asked for even more money through their taxes to support Nortel. ==== 2009 ==== The EDC had agreed to provide up to million in short-term financing through an existing bonding facility.
creditors. In February 2010, Ernst & Young, the court-appointed monitor of Nortel's Canadian bankruptcy proceedings, reported that the assets of Nortel's Health and Welfare Trust had a shortfall of $37 million in its net assets as of December 31, 2008.
However, court-appointed representatives for Nortel's former employees, who are creditors in the Ontario bankruptcy court, have signed an agreement to not oppose any employee incentive program. Genband purchased the Carrier VoIP and Application Solutions (CVAS) unit in May 2010, as Nortel accepted its stalking horse bid of $282 million, with adjustments that decreased the net sale price to about $100 million, without a formal bidding process.
Ericsson purchased Nortel's share in its joint venture with LG Electronics for US$242 million, forming LG-Ericsson, in June 2010.
Ericsson also purchased Nortel's final operating unit, the Multi-Service Switch division, in September 2010 for US$65 million.
The SEC said that at least a year's worth of the alleged book-keeping took place while John Roth was still CEO of Nortel, even though no charges were laid against him. === Treatment of Nortel pensioners === On June 23, 2010, the News and Observer published a story criticizing treatment pensioners have been receiving from their former employer, Nortel.
The trial began on January 16, 2012, ending with acquittals for all three. The United States Securities and Exchange Commission (SEC) also filed charges against them and four vice-presidents for civil fraud.
However, it is alleged that since then, the HWT Governance Committees and third party trustee, Northern Trust, breached their fiduciary duties to protect Nortel's disabled employees and survivors of deceased employees by allowing Nortel to misdirect over million from the HWT for purposes inconsistent with the terms of the HWT. As of March 1, 2012, Northern Trust continues to act as the paying agent for Canadian Nortel pensioners. === Bookkeeping irregularities === In 2007, both the U.S.
On December 19, 2014, remaining civil charges from the Ontario Securities Commission and SEC were simultaneously dropped. ==== Owens and Zafirovski ==== After Dunn's firing, retired United States Admiral Bill Owens – at the time a member of the board of directors – was appointed interim CEO.
retirement income plan is now managed by PBGC Pension Benefit Guaranty Corporation. In January 2014, a pact between the U.S.
By 2016 Nortel had sold billions of dollars' worth of assets.
In April 2016, Nortel went back to court for a fresh round of legal arguments in a seven-year-old bankruptcy which cost creditors about $2 billion including attorney fees.
and Canada approved a negotiated settlement of bankruptcy proceedings in 2017. == History == === Origins === Alexander Graham Bell conceived the technical aspects of the telephone and invented it in July 1874, while residing with his parents at their farm in Tutela Heights, on the outskirts of Brantford, Ontario.
and Canada approved a negotiated settlement among competing creditors in January 2017. == Products == Nortel made telecommunications, computer network equipment and software.
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