To Bail Out or Not to Bail Out

By Mark Evans | Published: January 22, 2009

The CBC is running a poll on whether the federal government (Canada) should bail out Nortel if the company asks.

What do you think?

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  • Another_Nortel_Watcher

    Not unless the bailout is conditional upon replacement of both the Chairman and CEO, otherwise it will be just more money down the drain.

  • http://nortelinsider.wordpress.com/ Desk Jockey

    They need strict conditions on any bailout, which would require oversight, which makes it impractical. As much as I love this company a bailout might not help if the upper management is not excised.

    If nothing changes there, giving Nortel a bailout will just allow for more lavish executive bonuses and a return to the use of a private jet as a commuting tool for Mike Z.

  • protosphere

    The CBC poll is flawed.

    This morning it went from 57% no to 72% yes.
    Apparently the same IP can vote more than once and some nutso spent all afternnon accounting for most of the 1200 votes under the yes vote.

    The Globe & Mail ran an identical poll and found 88% of the respondents said NO to a bail out for Nortel.

    Check it out.

  • I_have_my_doubts

    they should Bail out Nortel. Nortel is a company that Canada should be proud of.
    BUT this should be done IF and only IF some conditions are met first.
    IMHO,
    #1, preserve and protect Canadian jobs.
    #2 dismiss executive management without any further $ to them in any way shape or form.

  • felixmk

    Nortel as a separate independent company is finished and a bailout from the Canadian Govt will not help. Customers are running for the hills and will not come back unless another credible vendor(s) (E//, Huawei, Cisco..) take over all or parts of Nortel.

  • NortelGal

    Unless the CEO. Hackney, and BOD are replaced, I would definitely not support a bailout. We do not need more of the same; look where it's gotten us!

  • NortelTragedy

    Yes, replace the Board, CEO and all senior executives (difficult to refer to them as leadership or managers), with conditions of Canadian employment, return to innovation, external governance, and performance audits – no more vaporware (i.e., hyper-connectivity), half-truths, Six Sigma or feel-good programs (Own It).

    Even then, is it worth absorbing the debt? What is (would be) the future ROI, assuming it's a loan or an investment? I'm afraid it may be too little, too late.

  • broadbandbill

    Proto,

    As maligned as you have been, I truly appreciate your mind; great investigative journalism…–bb

  • less

    Do the remaining employees expect the brass to eventually reinstate some sort of benefits programs etc. by generously gifting Nortel with their lost money in the interim?

    Is Nortel planning to chuck 'em and hire cheap young-buck grads with cutting edge skills who don't know from benefits, and are more open to 6 Sigma? Will they again outsource all the “basics”? Reinvite seasoned colleagues from overseas to work for cheap in the remaning downsized centers of excellence? Are any of the above gonna wear ESD straps in the labs?

  • Casual_Observer

    Don't bailout Nortel. Just start another company or companies with government funded money and fund entrepreneurs to create smaller more efficient technology companies in Canada. This would entice people to leave Nortel and use their talent to the best of their ability. Nortel needs to be left behind along with its legacy. Renewal of Canadian industries requires more than bailing out failed institutions.

  • broadbandbill

    Only under the following STRINGENT terms and conditions:

    1. Close ALL ‘Centers of Excellence” outside US/Canada (including CoE in Mexico).

    2. Ensure all NT Employees participate in ‘Preferred X’ equity plan, including the ones that will probably get cut during the restructuring phase (It’s not their fault, you fricking morons!!!!).

    3. Reduce ALL Executive Management salaries to US$1/per year plus decent equity plan; let them taste what REAL risk is like (walk-the walk and see if you are men enough!!!). Travel vouchers for Greyhound Bus only! Air travel at their expense.

    4. Replace everyone on the BoD by an oversight committee that includes current and former Rank ‘n File Employees (e.g.: Desk_Jockey, Another_Nortel_Watcher, Nortel_Gal, Many, others – even Proto!).

    5. Take out the mama’s boys that can’t handle this (e.g.: Hackney) and leave them in the frozen tundra with one day’s survival supplies. Humanity will be much better off, either way. Oh yeah; get a camera crew to do a reality show called: “BALLS; Can’t Freeze What You Don’t Have!”

    6. Contact bb for next steps including FREE consulting services to ALL NT employees.

    Fricking simple…–bb

  • broadbandbill

    That's a good one too…–bb

  • http://nortelinsider.wordpress.com/ Desk Jockey

    Agreed.

    If the goal of any bailout is to preserve jobs, then this will help that. Out with the old (i.e. corrupt) and in with the new.

  • Many

    Let me guess the first octet of the IP Address was 47 :)

  • jlm_rmn

    Assuming the goal of any bailout is to preserve jobs as said below, in this special deep crisis period, one must stop outsourced activities in India, China and repatriate them to their origin. There may still be experienced people in Canada and other sites in Europe, able to perform the work for cheeper because the efficiency is much higher.

  • Dont_Believe_The_Zhype

    Don't personally believe in bail outs, there is no certainty that this will do anything more than secure fat pay outs to Zman and Execs for longer. The Execs will just push more jobs overseas, with no allowance for drop in service levels.

    Bail outs only should be granted on the proviso that increases to salary and packages be returned and notional salary taken for duration by Execs.

    But then again who are we kidding! They (Execs et al) are only in it for their own ill gotten gains at the expense of the rank & file. Like they honestly care about nortel???

    You must be Zjoking

  • 1derY

    How can one remove the BoDs ?.

    The BoDs brought Z in and they certainly wont' remove him…They all will not go without a fuss especially when their pockets are already full with money and their a… are covered with insurance money.

    John “the bad stuff is behind us” Manley will not see Conversative government to force his hand.

    The bailout will not happen as long as these crooks are around…At minimum Z, the BoDs , and all the presidents have to be removed for the bailout to have a chance… I don't see that to happen.

    There are another 4-5 layers of VPs/Directors that we haven't gotten to… This company is rotten beyond the core…I would say, let it's buried.

    I feel for all the hardworking employees who have stuck around all these years.

  • NortelEmp

    Casual Observer, you raise an interesting point. Government “investment” should have a return for the country and the country's people. If the Canadian government gave Nortel money, how would Canada benefit? Clearly the company will reduce the number of employees and if the past is any indication of the future, many jobs will be moved outside of Canada. In the end, what might remain is a controlling entity (eg. Toronto HQ) with numerous subsidiaries elsewhere – assuming, of course, that it's actually possible to recover from this situation.

    Canada needs to focus on developing in areas that will be of benefit to the country in the future. Telecom certainly falls into that bucket but how can Canada differentiate itself from other nations' advantages? Is bailing out Nortel the best use of cash or would it be better to give the money to a company like RIM (for example only) and encourage Canadian Nortel employees to work there instead?

    There is an opportunity cost to bailouts. What should the government care most about? Nortel employees and Canadian innovation or a global MNC that has been unable to recover from an 8 year old crisis? This is not to lay blame – maybe it's just impossible to fix the situation as is with cash. Just like businesses need to innovate, so does the government. Is throwing cash at an old problem the best way?

  • joremero

    Your logic is flawed,
    The fact that the surveys are not accurate because of the access of biased respondents (employees, ex-employees, investors, etc) was different. It seems pretty obvious to me that employees got a lot of access to the CBC poll while other people (maybe ex-employees or comptetitors or simply real people) got access to the other poll…
    That doesn't mean in any way that someone voted 500 times.

  • joremero

    I think everyone agrees tha the BoDs and Z should go… then NT should get help

  • joremero

    I mean, most agree, I know not everyone….

  • joremero

    protosphere,
    I forgot to mention that not everything is a conspiracy ;)

  • ACloseObserver

    Let it go. There's too much capacity in the market and NT no longer has the ability to compete effectively – it's fallen too far behind in its IP, and it no longer has critical mass in any of the markets in which it competes.

  • Cataractus

    Apart from the fact that bailouts are a bad idea in general, Nortel would be a specifically bad candidate due to the fact that most of its current employees aren't even Canadian. The issue of spending taxpayers money to save jobs in Istanbul, Mexico City, Mumbai, Beijing and Novgorod, not to mention the USA, would pop up immediately. MPs would quite rightly determine that the Canadian taxpayer should not pay to save mostly foreign jobs.

  • http://nortelinsider.wordpress.com/ Desk Jockey

    Well said my friend!

    Your wit is matched only by your capacity for keen observation!

    Now if only your words would come true…

  • nortelgirl

    Great plan…Its been ages since I've laughed out loud whilst sitting in front of my computer screen – Thanks!

  • broadbandbill

    Thanks nortelgirl, that alone was worth the touble…-bb

  • broadbandbill

    Thanks DJ. The lack the two things :) required to make this come true…–bb

  • oneof30kleft

    i agree with cataractus, the possible bailout is frought with problems. from the us employee stand point those other centers in mexico, istanbul, mumbai, bejing and novgorod can rot in h__l.. and lets not use us money on those centers either

  • This_bites

    I'd prefer to let the Credit Committee and Monitors punt the current execs and BoD in favor of some Strategic and Tactical leaders that know this industry. Then they can apply for DIP loans along with their other cost saving restructuring plans to help to get though. Any help from the government(s) would be better spent on two other fronts. First, spend on the build-out of telecom infrastructure across North America. It would put a lot of jobs back across the board and allow Nortel the opportunity to compete for their share. Second, minimize employee and pension impacts (if the lead creditors can expect about 20 cents on the dollar, then put at least similar amounts up for severence and pension while under restructuring). The worker bees are getting reamed on this one.

  • http://nortelinsider.wordpress.com/ Desk Jockey

    This poll has turned into a farce.

    The followers of the “I believe” campaign are actively spamming it because they have the blind belief that a bailout is all that is needed to rectify the situation.

    As I have stated before, a straight bailout won't solve a thing. It is like keeping the feeding tube in without excising the cancer that is killing the patient.

    The “I believe” nuts – who are sincere but sorely misguided – are so desperate that this is what is has come to. This is more a reflection of how much they have been abused, misused and misguided by upper management.

  • ex_norteler

    This is really a selfish opinion. It's the same as the top officer collecting huge bonus while cutting jobs. No matter which office they are working in, they are all Nortel employee. They contribute to the company. Nortel would be out of bussiness one year ago if had not moved those jobs to the lower cost centers. The saved money was used to pay your salary which they could hire 5-10 people in those place. And trust me, those people deliver the same good job as you do.

  • exnt2

    no bailout because:
    . the company is grossly mis-managed,
    . 80% of the company is outside Canada,
    . huge outsourcing and NT still gets R&D credits for work outside canada
    . zero competitiveness so no value on taxpayer money
    . massive debt will only result in holding a junk company

    I believe NT management are crooks. They do not deserve a penny.

  • Another_Nortel_Watcher

    Bailouts can come with conditions, in fact they always do.

    I think a bailout is unlikely, but not for the reasons you specify because those are things a government can fix.

  • protospherical1

    Here are the Globe and Mail's Poll results:
    85% = NO
    15%= YES

    http://www.theglobeandmail.com/servlet/Page/doc…

    Any IP can vote multiple times on the CBC's poll as I indicated.
    I should have stated it was imbalanced and left it at that than to reasoning why as I got some flack for that albeit still maintain my position this is why. (multi-voters)

    Again, CBS's poll is not factual or reflective of Canadian's opinion,in poll. It is misaligned =) with prejudice. In other words, horsefeathers, The Globe's seems to be more accurate over the very short duration it ran and multiply larger.

    As for bailing out a white elephant, who exports jobs, and can't get its losing numbers straight, I would say this is profoundly absurd to the point of uncontrollable laughter. However, the sobering reflection of what the EDC's did with taxpayers money exporting jobs than product, let alone the OSC which is bound to bust a stitch giving RIM and unprecedented $100M fine for coming forward and Nortel at measly $1M for costs in the largest fraud in Canada. So hey, perhaps anything goes to defy outrage and maybe it is really me that is misaligned here after all =) My opinion in that I am not can not be pried from me without proof that I am. =)

  • Nortel_Sucker

    You must be joking. Moving Engineering/Support jobs is one of the reasons the Company is going down. The products are state of the art and complex. The learning curve is long. You would not see any payback on this for at least 5 years. Not to mention the cost of building and laying down the infrastructure.
    Shipping alone is a massive expensive especially in China where it takes 4-5 months to receive.
    Also these so called low wage earners are now demanding more pay.
    An experienced engineer could solve a Customer problem in 10 minutes where the new folks take days. One Customer from North America called for support and got a voicemail in Turkish. Not Happy.
    This is not to say the overseas people are at fault here, they were just thrown into something more then they were ready to handle by Judas Z.
    They do not deliver the “same good job as you put it”, maybe in the future but yo bad there is no future in Chapter 7.
    The outsourcing of jobs was started in about 1998, so how come the Company is now in Bankruptcy protection and the stocks sewered if it is such a good move?

  • scalpcutter

    I agree one hundred percent with a BAILOUT providing the following condtions are parf of the bailout:
    A/ Get rid of BOD and Executives.
    B/ Bring jobs back to Canada.
    C/ Re-institute severance for workers who will be laid off in the future.
    And since none of the above is going to happen you know what that means.

  • jacqui1

    Yes, with a new Management team in place

  • jacqui1

    Rememeber, Optical started in UK at the Nortel Office in Harlow, its not a question of moving jobs back to Canada, most of its revenue is outside Canada therefore its getting the right people to run the company, keeping the company global is the only way forward. For the last 6 years we have had the wrong Leaders who have just spent spent spent. Look at the cost of Six Sigma ?? was the really necessary ? no it was not.

  • jacqui1

    Its not to late, what about a Management buy out?

  • jphil25

    Nortel has provided a wide range of products to Canada and the world.
    So many canadians have had jobs with NORTEL. However, management has been corrupt to say the least.
    The canadian govt has to bailout NORTEL on clear outlined conditions to keep the company going and save jobs. New management, as suggested by others, would be one of those conditions.

  • jphil25

    Nortel has provided a wide range of products to Canada and the world.
    So many canadians have had jobs with NORTEL. However, management has been corrupt to say the least.
    The canadian govt has to bailout NORTEL on clear outlined conditions to keep the company going and save jobs. New management, as suggested by others, would be one of those conditions.

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