TORONTO (Reuters) - Nortel Networks Corp, North America’s biggest telephone equipment maker, filed for Chapter 11 bankruptcy protection with the U.S. bankruptcy court in Delaware on Wednesday.
EAMON HOEY, TELECOMMUNICATIONS CONSULTANT AT TORONTO-BASED MANAGEMENT CONSULTING FIRM HOEY AND ASSOCIATES
“It’s a sad day for Canada, in the sense that we’ve lost one of our icons.”
“They failed to ask the fundamental questions: who are our customers today and who will be our customers tomorrow.”
“The whole industry has been going through a severe restructuring that began in the mid 90s and Nortel is a casualty of that.”
“It’s not without some degree of criticism (for Nortel), they were not just caught in the downdraft.”
BRENT BRACELIN, ANALYST AT PACIFIC CREST SECURITIES:
“Obviously it doesn’t come as a big shock. This was telegraphed from the past three months,” he said.
“There will likely be industry consolidation. Some of their assets will be bought. Some will not,” he said.
“I’d be hesitant to say they won’t be able to resurface in some smaller form or fashion but, it’s not looking good at this point,” he said. “This is a poster child for a company that has too much debt. As we went into this downturn they weren’t in a good position.”
PAUL HARRIS, PORTFOLIO MANAGER AT AVENUE INVESTMENT MANAGEMENT:
“I think it’s the best thing for them to do. I think the company is in perpetual restructuring ... their businesses are not growing. I think you’re going into a deeper recession and so it’s going to be more and more difficult. It probably helps them to properly restructure the company, and move it forward if they can.”
NIKOS THEODOSOPOULOS, ANALYST AT UBS:
“It think its a smart move for the company because they’ll be able to manage the business more effectively because they still have a lot of cash.”
“It will allow them to make more logical and timely decisions on what assets to sell.”
“The company will be financially stronger when it comes through this. They’re avoiding a slow death by doing this.”
“The company is going to have to sell assets and change its focus. Its not going to be the same company.”
Theodosopoulos said the company could sell its CDMA wireless network equipment business and its unit that sells equipment for optical networks and may end up as a provider of professional services and network equipment for enterprises.
GAVIN GRAHAM, DIRECTOR OF INVESTMENTS AT BMO ASSET MANAGEMENT:
“It’s obviously a remarkable transformation from where it was as the largest company in Canada worth about 35 percent of the TSX in 2000. But this is a reflection of the way that the telecommunications industry has changed.”
“Nortel has been a small cap for the last year or so. It has lost so much of its value in the last year. The market has been telling you that this is going to be happening, so it should not be a great surprise except perhaps the timing.”
DUNCAN STEWART, ANALYST AT DSAM CONSULTING IN TORONTO:
“Based on this filing, the board of directors must believe that not only is the fourth quarter bad, but that the first quarter is going to be just as bad or worse.”
“Although they have cash in the short term, even the medium-term outlook is not enough to make the company viable as a going concern.”
With additional reporting by Susan Taylor in Ottawa, Sinead Carew in New York
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