On January 14, 2009, Nortel
Networks, the world's largest
maker of telecommunications equipment, announced that it was
filing for Chapter 11 bankruptcy protection in the US, Canada and Europe.
However, the shocking revelation did not come as a surprise though. For, the fact
that Nortel Networks, the world's largest maker of telecom equipments, was
in trouble for long was not hidden from anyone in the telecom industry.
Despite a series of restructuring measures, including thousands of job cuts, the
company has failed to reverse its slide that began in the wake of the burst of
the technology bubble in the early part of this decade. The announcement
comes on the heels of a worst third quarter September 2008 results, which saw
the Ontario-based company post a loss of $3.4 bn or $6.85 a share on the back of
a declining revenue which fell 14% to $2.3 bn. The company's lenders were in for
a rude shock as the announcement came just a day before the scheduled
interest payment of $107 mn, though it said it has about $2.4 bn in cash. Also,
citing reduced spending by customers, the company lowered its outlook for the
second time in the last two months.
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