Last One Out Turn Off The Lights

Nortel has been shedding jobs for over a decade as it lost money every year since the dot com bubble burst. But of course the guy at the top responsible for Nortel's losses keeps his job. Whle advocating layoffs and concessions as the solution to Nortels problems. Unfortunately that has been tried for a decade and it ain't worked.

Nortel has now lost more than $4.5 billion since Chief Executive Officer Mike Zafirovski took over at the end of 2005, pushing him to cut 18 percent of the workforce. Today he said he plans further reorganization aimed at saving as much as $400 million next year, freezing travel, ending salary increases and getting rid of at least four top executives.

The more than 32,000 people who work for shrunken telecom giant Nortel, its investors who have seen share value plunge from $20 to pennies in a year, and analysts following the firm awoke Monday expecting a financial tsunami of an announcement.What they got as Nortel announced a $3 billion red ink bath for the third quarter was a series of announcements that might slosh water out of a nearly full bathtub.Did a reorganization plan accompanied by some job trims and the booting of some top executives save the S.S. Nortel, or did management just reshuffle deckchairs on what many analysts are growing to believe is a business Titanic?

Deregulation and the optical boom
In 1983, due to deregulation, Bell Canada Enterprises (later shortened to BCE) was formed as the parent company to Bell Canada and Northern Telecom. Bell-Northern Research was jointly owned 50-50 by Bell Canada and Northern Telecom. The combined three companies were referred to as the tricorporate.[5][6][7]
As Nortel, the streamlined identity it adopted for its 100-year anniversary in 1995, the company set out to dominate the burgeoning global market for public and private networks.
In 1998, with the acquisition of Bay Networks, the company's name was changed to Nortel Networks to emphasize its ability to provide complete solutions for multiprotocol, multiservice, global networking over the Internet and other communications networks. As a consequence of the stock transaction used to purchase Bay Networks, BCE ceased to be the majority shareholder of Nortel. In 2000, BCE spun-out Nortel, distributing its holdings of Nortel to its shareholders. Bell-Northern Research was gradually absorbed into Nortel, as it first acquired a majority share in BNR, and eventually acquired the entire company.

After the Internet bubble

Nortel Networks Corp (NYSE: NT) stock price (source: ZenoBank.com)
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 price of the company's shares to unheard-of levels despite the company's repeated failure to turn a profit. Under the leadership of 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, Nortel was to become one of the most spectacular casualties.
At its height, Nortel accounted for more than a third of the total valuation of all the companies listed on the Toronto Stock Exchange (TSX). Nortel's market capitalization fell from C$398 billion in September 2000 to less than $5 billion in August 2002. Nortel's stock price plunged from C$124 to $0.47. When Nortel's stock crashed, it took with it a wide swath of Canadian investors and pension funds, and left 60,000 Nortel employees unemployed.
CEO John Roth retired under controversy to be succeeded by former CFO Frank Dunn. Despite some initial perceived success in turning the company around, he was fired for cause in 2004 after being accused of financial mismanagement. Dunn and other former Nortel officers have been accused of engaging in accounting fraud by the SEC (for more information, refer to "Accounting scandal").[8]
Retired United States Admiral Bill Owens was hired as the CEO to replace Dunn. In late 2004, Nortel Networks returned to using the Nortel name for branding purposes only (the official company name was not changed).
Nortel acquired PEC Solutions in June, 2005, renaming it Nortel Government Solutions Incorporated or NGS. The wholly-owned subsidiary provides information technology and telecommunications services to a variety of government agencies and departments.[9]
On August 17, 2005, LG Electronics and Nortel signed an agreement to form a joint venture to offer telecom and networking solutions in the wireline, optical, wireless and enterprise areas for South Korean and global customers. Nortel owns 50 percent plus one share in the joint venture.

Here are some key dates in the company's history:
May 1, 2000 - BCE Inc (BCE.TO: Quote, Profile, Research, Stock Buzz), Canada's biggest telecommunications group, completes spinoff to shareholders of 35 percent stake in Nortel, worth about C$88.5 billion ($75.6 billion)
Feb. 15, 2001 - Nortel cuts 2001 earnings and sales forecast in half, blaming severe erosion in U.S. economic conditions. The warning triggers a 33 percent drop in its stock and brings class-action lawsuits.
May 29, 2002 - Nortel plans to cut 3,500 jobs and sell more assets as it pares its revenue forecast.
June 4 - Nortel shares collapse to decade-long lows on concerns a new financing will further dilute its stock. Cash-hungry Nortel raises $1.49 billion June 7.
Oct. 23, 2003 - Nortel reports a quarterly profit, but says it will restate results going back to 2000.
March 15, 2004 - Nortel says it will likely restate results for a second time and delay filing its annual report.
April 5 - The U.S. Securities and Exchange Commission launches a formal investigation into Nortel's accounting
June 29 - Nortel exits manufacturing business, sells plants to Flextronics International, transfers 2,500 staff.
Sept. 30 - Nortel cuts almost 10 percent of its staff, 3,250 jobs, and vacates offices worldwide.
Jan. 11, 2005 - Nortel restates its results and says 12 senior executives will repay $8.6 million of bonuses.
Oct. 17 - Motorola's No. 2 executive, Mike Zafirovski, is appointed CEO, promising renewed growth and focus.
Feb. 8, 2006 - Nortel says it will pay $2.47 billion to settle two class-action suits from its accounting scandal.
Feb. 7, 2007 - Nortel slashes 3,900 jobs and shifts 1,000 positions to lower-cost locations such as China and India.

Oct. 15 - Nortel pays $35 million to settle civil charges filed by the SEC related to its accounting scandal.
Feb. 27, 2008 - Nortel says it will cut 2,1000 jobs as it faces persistently slow demand for its products.
Sept. 17, 2008 - Nortel cuts revenue forecast, plans another round of restructuring and the sale of its Metro Ethernet Networks business. It says it may also look for a partner to develop fourth-generation wireless technology.
Nov. 10 - Nortel announces 1,300 layoffs, a freeze on salary increases and a review of its real-estate portfolio after posting a $3.4 billion quarterly loss.

SEE:

Nortels Chickens Roost

NORTEL: Canada's Enron

Nortel Slash & Burn

NORTEL: REDUX

Find blog posts, photos, events and more off-site about:Nortel,, fraud,, layoffs,, contracting out,, off shoring,, teleco,, telecoms,, dot.com,, internet,, Canada,, China,, India,, telecommunications,, teleco,, internet

Whiners and Losers

This is the same line used by the provincial tories in Alberta since the days of King Klein; the government should not pick winners and lossers iin the capitalist marketplace. But of course it does, as we have seen with Alberta's support of privatiziation initiatives like K-Bro contracting outhospital laundry services, not to mention of course oil and gas development royalty and tax holidays, and dare I say investment in the mythical CO2 coal extraction process that will supposedly reduce methane gas.

Now the Feds are denying the obvious as Jim Flaherty explains about a pending bail out for the auto industry in Canada, with nary a recongition that yes he indeed just did pick winners and losers in Canada's auto industry. Canada: Government is open to selective industry support

Mr. Flaherty said most economists would consider a bailout unwise, since such a
package puts government in the dicey business of choosing winners and losers.
Rather, he said, he would be guided by which plants have the best chance of
remaining viable over the long term.
"So if General Motors is going to build a hybrid car in Oshawa, people can understand that that is a good investment for the longer term. Operating a large truck plant, pickup trucks - probably not a good investment of taxpayers' money," Mr. Flaherty said.
His top priority, however, is to ensure that banks are lending to each other, and that credit is
available to corporate and household borrowers at a decent price. A
well-functioning credit market, he said, will help the manufacturing sector as
much as any kind of direct aid.
David Paterson, vice-president of corporate and environmental affairs for
General Motors of Canada Ltd., said the largest auto maker in Canada has not
outlined specific proposals to Ottawa, but supports calls for both immediate
assistance and a longer-term Canadian program similar to an existing $25-billion
fund Washington created this year. That fund is supposed to help the industry
develop more environmentally friendly technologies.
Mr. Paterson said GM is in the midst of transforming its business in Canada
to meet the sustainability objective Mr. Flaherty has outlined.

There ya go Jim ya picked a winner. But of course this is not a real industrial policy, nor what is needed to create a Made In Canada Auto Industry. Which of course is workers control of production through 'workers cooperatives owning the factories. Now that would be worth taxpayers dollars. Anything is else is the same old same old neo-con crap; public funding of private capitalism.

SEE:

Concessions Don't Work

And Then There Was One

October Surprise Was The Market Crash

No Austrians In Foxholes

Pension Rip Off

Deja Vu

The Failure of Privatization



Find blog posts, photos, events and more off-site about:
US, Auto, GM, Delphi, UAW, Pensions, layoffs, workers, bankruptcy, Chapter11,MGuinty, GM, Buzz, Hargrove, Camaro, Oshawa, Ontario, CorporateWelfare, Canada, cars, automobilie, production, taxes, taxcredit, investment, environment, hybrid, self-valorization,, self-management,, workers control,, autoworkers,, Buzz Hargrove,,CAW, Big Three Auto,, libertarian socialism, automobile, Frank Stronach, Magna, business unions, auto parts, workers, layoffs, plant-closings, workers-control, unions, labour, Canada,
Great Depression, John McCain, market crash, free trade, Republicans, recession, asset-backed commercial paper ,, goldhomes, mortgages, housing, bubble, US, economy, oil prices, sub-prime mortgage, Wall Street, crash, recession,October Surprise, Inflation, Staglation, Stock-Market, US, Federal-Reserve-Chairman, Oil, gold, commoditiesSmoot-Hawley, protectionism, tariffs, Herbert Hoover, U.S., U.S. economy, Canada, Flaherty, tax cuts, corporate tax cuts, politics, Conservativestaxes, tax-credit, budget, economy, government, Conservatives, Flaherty, HarperSalaries, Canada, wages, Economy,

Super Bubble Burst

As Eric Janzen in the February issue of Harpers Magazine warned this is a super bubble that just burst.

A financial bubble is a market aberration manufactured by government, finance, and industry, a shared speculative hallucination and then a crash, followed by depression. Bubbles were once very rare—one every hundred years or so was enough to motivate politicians, bearing the post-bubble ire of their newly destitute citizenry, to enact legislation that would prevent subsequent occurrences. After the dust settled from the 1720 crash of the South Sea Bubble, for instance, British Parliament passed the Bubble Act to forbid “raising or pretending to raise a transferable stock.” For a century this law did much to prevent the formation of new speculative swellings.

The housing bubble has left us in dire shape, worse than after the technology-stock bubble, when the Federal Reserve Funds Rate was 6 percent, the dollar was at a multi-decade peak, the federal government was running a surplus, and tax rates were relatively high, making reflation—interest-rate cuts, dollar depreciation, increased government spending, and tax cuts—relatively painless. Now the Funds Rate is only 4.5 percent, the dollar is at multi-decade lows, the federal budget is in deficit, and tax cuts are still in effect. The chronic trade deficit, the sudden depreciation of our currency, and the lack of foreign buyers willing to purchase its debt will require the United States government to print new money simply to fund its own operations and pay its 22 million employees.


But unlike the South Sea Bubble or the Tulip Bubble, or even the Dot Com Bubble this one has brought capitalism to its global knees.

Bank of Canada Governor Mark Carney underscored the deteriorating situation when he said Canada’s business conditions will worsen alongside other industrialized countries next year and the Canadian economy may slip into a recession for the first time since 1992.
“We are predicting very marginal growth in 2009,” Carney said in an interview with Bloomberg News, when asked if he thought a recession might happen. “By definition that’s close to negative growth, and if we have a balanced forecast you can see it going either side, so it’s a possibility."
Carney cut the Bank of Canada’s key interest rate to 2.25 per cent last month and said the world’s eighth-largest economy would shrink this quarter and stall in the first three months of 2009, just skirting the two quarters of contraction that most economists call a recession. He has said further rate cuts may be needed to prop up economic growth.
In Brazil, Flaherty also said the world is facing what appears to be a runaway economic downturn. He noted that the International Monetary Fund continues to lower its growth forecasts month by month. The IMF now predicts the major industrialized Group of 7 countries will fall into a recession next year - with the exception of Canada, which is forecast to post a minuscule 0.3 per cent growth.

For the leading spokespeople of capitalism to say they didn't see it coming well thats laughable. It could be excused as Hegelian black humour if the mouthpieces of capital were not so sincere in denying the obvious; recession and the dreaded follow through; depression.

Hegel remarks somewhere that history tends to repeat itself. He forgot to add: the first time as tragedy, the second time as farce.

Karl Marx, The Eighteenth Brumaire of Louis Bonaparte (1852)

SEE:

And Then There Was One

Concessions Don't Work

Find blog posts, photos, events and more off-site about: US, Auto, GM, Delphi, UAW, Pensions, layoffs, workers, bankruptcy, Chapter11,MGuinty, GM, Buzz, Hargrove, Camaro, Oshawa, Ontario, CorporateWelfare, Canada, cars, automobilie, production, taxes, taxcredit, investment, environment, hybrid, self-valorization,, self-management,, workers control,, autoworkers,, Buzz Hargrove,,CAW, Big Three Auto,, libertarian socialism, automobile, Frank Stronach, Magna, business unions, auto parts, workers, layoffs, plant-closings, workers-control, unions, labour, Canada, Great Depression, John McCain, market crash, free trade, Republicans, recession, asset-backed commercial paper ,, goldhomes, mortgages, housing, bubble, US, economy, oil prices, sub-prime mortgage, Wall Street, crash, recession,October Surprise, Inflation, Staglation, Stock-Market, US, Federal-Reserve-Chairman, Oil, gold, commoditiesSmoot-Hawley, protectionism, tariffs, Herbert Hoover, U.S., U.S. economy, Canada, Flaherty, tax cuts, corporate tax cuts, politics, Conservativestaxes, tax-credit, budget, economy, government, Conservatives, Flaherty, HarperSalaries, Canada, wages, Economy,