Nortel gives up, files for bankruptcy

Oh Boy today was one of the worst day for telecom industry. Nortel the giant telecom vendor, as speculated for couple of weeks, finally pulled the plug and filed for bankruptcy . It’s devastating to see such a big leader go down south. I guess nothing worked out right for this ailing telecom equipment vendor. There was a time when folks would die to work for Nortel, and it was once trading at $1231 dollars a share. Mind blowing! In fact, Nortel during the 1990 telecom and internet boom had more than 95,000 employees.

Nortel’s shares were worth a total of around $192 million dollars yesterday. It has around 26,000 employees spread across North America and Canada. It’s sad to see a company that has been around for such a long time file for bankruptcy. It was started in 1895. Though the company is optimistic of turning around, analysts are not. Some of the analyst predict that by filing bankruptcy, Nortel would lose significant business and potentially send the company into death spiral.

Apparently the bankruptcy was filed to preserve the $2.4 billion dollar cash, which the company plans to use to preserve its liquidity and fund operations during the restructuring process.

Here is what the CEO has to say about the bankruptcy:

"Nortel must be put on a sound financial footing once and for all," said Nortel President and CEO Mike Zafirovski. "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. I am confident that the actions we're announcing today will be the fastest, most effective means to translate our improved operational efficiency, double-digit productivity, focused R&D and technology leadership into long-term success. I want to reaffirm Nortel's dedication to delivering world-class solutions and services to customers."

Looks like the economy is showing no signs of improvement and events like these are going to worsen the situation for job seekers. Is it time to ditch the ailing telecom arena? Maybe, as many of my friends and colleague say, “Time to ditch this market and move on with something else”