Required Reading: Ernst & Young’s Reports

that's what I was thinking:
We need to layoff thousands of workers but we don't have money to pay severance packages… but now we can lay them off for free

Another way Mr. Z is screwing the employees ROYALLY, is that whatever money we have in the deferred compensation plan is toasted. The Long Term Capital Accumulation Plan (aka Deferred Compensation) was touted as a way for employees to accelerate their retirement savings. You can save up to 100% of your salary and bonus in pre-tax money toward retirement, and many employees do. Many have 5, 10, 20 or even more % of pay every month saved into this account. This can easily be a few $100Ks of savings per employee.

During a GIS, all the HR person was able to say was that they will freeze any further distribution. Apparently, the savings are held as Nortel assets and the employee's hard earned SWEAT and BLOOD money are now gone into the same pool to pay Nortel's debts!

Wall Street still thinks that Mr. Z is an OK leader and blames much of this on the downturn and difficulties in the teleocm segment. But what I hope the world to understand and focus on, is the BANKRUPTCY in moral and ethics in this blood sucking management team. I do not know how these people can sleep – ever!

By the way, have anyone heard about any possible legal actions regarding this? Deferred compensation should be treated as salary. And salary is the highest priority payout in bankruptcy, is it not?

Mr. BB

As an employee, it proves to me that we have all been taken for a ride. Many of my colleages have seen the light and no longer believe a word that Mike Z and his cohorts spew out.

They always seem to blame outside factors rather than looking to themselves for the answer, the company was never going to make money by selling off and concentrating on reducing the workforce. You actually have to sell stuff to make money!!

I feel completely and utterly let down by the Executive and Senior management, it disappoints me that these so called intelletual leaders are completely inept at running the business.

In the meantime I'll polish up my resume and hopefully find another role, somewhere where they treat the employees with honesty and respect.

While what you describe is criminal, unfortunately, salary is NOT the highest priority in a bankruptcy and Z and his band of thugs KNEW this from the get go, and this is one the primary reasons they filed for Ch 11: To continue to royally screw their loyal employee base, treating them like a whipping post as they have done for the past several years.

I direct you to the following articles for reference:
http://www.thestar.com/Business/article/571953

Key point: “Judge Geoffrey Morawetz of the Ontario Superior Court of Justice ordered that the company “shall be entitled but not required to pay” wages, salaries and employee benefits, as well as current service and special payments to pension plans.”

Entitled but NOT REQUIRED to pay wages, salaries and employee benefits. We all know what that means!

About BK: http://www.sec.gov/investor/pubs/bankrupt.htm

This article shows that the order of asset distribution in a bankruptcy is this: secured creditors, unsecured creditors and finally shareholders. Employees are not listed ANYWHERE, but instead MAY become part of one of these groups. In Nortel's case, those who were owned contractually-promised severance are being told to get in line with the unsecured creditors!

Just another one of the many tales of the Nortel executive abusing and mistreating their employees!

As a fellow employee, I feel for you, my friend.

We have been betrayed. We have been deceived. The Nortel executive can no longer be trusted. They have converted the company into a 1984-esque Orwellian dystopia, where whatever they say stands for the “the truth”, and you are expected to fall in line and say “I believe”, even when their own words contradict what they have previously said.

All the while they were planning for this bankruptcy. On the road to this catastrophe they repeated reiterated that it was “Business As Usual” and that there was nothing to worry about. All of this was taking place while they were continuing to scheme on how to profit even more off the fall of this once great company.

Their words carry no meaning any more. They have used and abused their trust in a way that outrageous to even those who are conditioned for corporate PR. Their propaganda news releases are so laced with meaningless doublespeak terms that you wonder if Big Brother himself wrote them.

War is Peace; Freedom is Slavery; Ignorance is Strength – this ought to be the new Nortel executive motto.

I've also read much of the document and in spite of the verbiage about deteriorating marked conditions, distressed business, etc., Mike Z and his GEnius cohorts share directly responsibility this fiasco. Just off the top of my head I can think of the following bad decisions directly and solely attributable to the Z-man and his toadies:

<ol>
<li>Instead of getting big $$$ by selling MEN or some other business in 2006/7 when the market was hungry, they waited until the company's finances were desperate – ultimately getting nothing. Judging from the results of the Avaya spinoff – $8.2 billion – this poor timing alone cost the GEniuses the opportunity of paying off ALL of Nortel's debts AND still leave billions in the bank.
<li>Instead of of focusing like a laser on development and innovation they focused on ridiculous Lean Six Sigma initiatives. I can't think of a single distressed company that's made a comeback without developing new products or lines of business. And not one of the Lean Six Sigma initiative that I know of ever panned out.</li>
<li>Instead of creating a lean organization with the maximum number of individual producers and the minimum level of management, they went in the reverse direction with Lean Six Sigma black belts, consultants, etc.
<li>Instead of using the deep pool of experienced and proven talent available in North America, they chose to open “centers of excellence” abroad which instead of generating savings ultimately costs the company vast sums of money.</li>
<li>Instead of filling in key executive posts with people experienced in the industry, such as Gary Daichendt, and in Nortel products, Mike Z filled these position with lackeys and empty suits like Joel Hackney and John Roese. Most of these flunkies themselve tended to be poor hirers and managers.
<li>Instead of firing or at least penalizing an executive for an outrageous road rage incident that showed clear instability and brought shame upon the company, Mike Z fired the head of Nortel's ONLY growing business (Dion Jeannou<sp>) in order to give him a promotion.</li>
<li>Instead of bolstering their own enterprise portfolio, they chose to spend tens of millions of dollars on a Microsoft partnership that produced nothing but an overpriced, unscaleable edge router and a software feature that allowed Nortel phones to ring at the same time as Microsoft software clients (whoa! whoa!).</li>
<li>Once partnered with Microsoft, they chose not to develop any value added features such as IVRs, ACD and Call Center, billing, etc., but instead spent tens of millions promoting a direct competitor's product.</li>
<li>There was neither vision nor competent execution to evolve beyond Nortel's legacy product line, e.g. CDMA. For instance, even though LTE has some promise, Nortel's LTE project is a joke, vaporware.</li>
<li>After blathering about refocusing Nortel as a service and software oriented company, there was absolutely zero execution. For cripes sake, the GEniuses refused to even retrain engineers to service and support Nortel's own products. The entire strategy was vaporware.</li>
<li>Joel Hackney rammed down the throats of Nortel's remaining tech support staff a 48 hour case turnaround plan while AT THE SAME TIME offshoring all design support to so called “centers of excellence” 8 time zones. Like all of Hackers other misfires, this initiative yielded ZERO revenue for the company while waisting enormmous amounts of time in paper shuffling cases that couldn't meet Hackers' arbitrary deadline.</li>
</ol>

This list doesn't even include their numerous ethical lapses, starting from Mike Z defrauding his former employer to become Nortel's CEO. Maybe I can save that for another post.

Troller, I'm probably wrong, but I thought the Appendix A data was for Canadian employees – if so, and averaging the employee salary cost at around 120k, it seems to work (with a Canadian staff reduction over the next few months of around 2500).

120K is a stab number I came up with when guesstimating their layoff rates around the 2002-2005 timefreame.

I'm quite surprised that they still maintain the large US sites, such as RTP Richardson, and some of the smaller localas, such as Rochester, Sunrise, etc.

You mean the other half is reserved for executive bonuses and golden parachutes?

hahaha. might be but i don't think so. what i wanted to point out that at the first glance nortel seems like a cash rich company, but in-depth analysis shows that it is not.

when i first read the mark's post, i thought that nortel would post 2,4 bn loss by 1Q2009, but after reading the details of the company's cash position, it seems totally different.

The rumor I hear is that 9000 layoffs are imminent.

Cataractus, very good summary. In particular, your points #2,3 and 4 are right on.

I have to say however, that I disagree with your point #9. Nortel's LTE project is not a joke, and is clearly ahead of the competition. Trust me, I know. The question is that it may be too early (market not ready for this technology yet).

I cannot confirm, but I heard that their severances are not paid as lump sum but as salary payment for X number of months. So, they would lose their severance as well.

brett5, I believe you are incorrect. The E&Y filings on the link provided in this entry are for Canada. The filings for the US are located on the EPIC systems website, as indicated by Mark in a different post.
http://chapter11.epiqsystems.com/docket/docketl…

The filings are for the US only. I'd suspect that the payroll is for the US only and therefore we might be looking at US reductions. Canada should have its own filings and reductions too. Yikes….