Nortel Networks Inc. (NYSE: NT), which has been floundering for years, put itself out of its misery today by filing for Chapter 11 bankruptcy protection.According to court papers filed in U.S. Bankruptcy Court in Delaware, the Canadian telecom equipment maker owes bondholders $3.8 billion and was facing $107 million in interest payments this week. The company already was facing de-listing from the New York Stock Exchange. It has a $2.4 billion cash position.
Amidst all of the usual hopeful spin in the company's press release was this telling sentence: "The company commenced a process to turn around and transform Nortel in late 2005, and the company made important progress on a number of fronts."
That's right folks, Nortel has been in a turnaround since 2005. Then again, Nortel is not a typical company. Former Chief Executive Michael Dunn, former Chief Financial Officer Douglas Beatty and former Controller Michael Gollolgy are facing charges in Canada for manipulating earnings in the early part of the decade. Shares of Nortel hit $900 on a split-adjusted basis in 2000.
The man brought it to straighten out the company was Mike Zafirovski, but it has not worked out that way and Nortel has lost almost $7 billion since he became CEO in 2005. Nonetheless, he continues to strike an optiimistic note.
"Nortel must be put on a sound financial footing once and for all," said Zafirovski in the press release. "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. "
There was no mention of job cuts, but you can bet those are coming.
Nortel continues to talk the talk. It just can't walk the walk.
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