The Toronto Star published a silly editorial yesterday suggesting the federal government’s unwillingness to block Nortel’s sale of its CDMA business to Ericsson is playing a key part in letting “Nortel slip from our grasp”.
The editorial declared the decision shows that:
“…Clement and the federal government washed their hands of the sale to foreign interests of a key piece of Nortel, the one-time gem of Canada’s high-tech sector. While not surprising – the government is simply following the wishes of its friends in the right-wing media – it is nonetheless regrettable.”
That’s just hogwash.
First, the CDMA business was not a “key piece” of Nortel. The CDMA business is dying a slow death as the wireless world embraces GSM and next-generation technology such as LTE. If Nortel had been smart, it would sold the CDMA business long ago to generate much-needed cash rather than wait until it filed for bankruptcy protection so it could auction it off to the highest bidder.
Second, it’s completely off the mark to suggest Ottawa should play a role in deciding what assets Nortel should or shouldn’t keep. This is the responsibility of Nortel’s senior management team and board, which unfortunately failed to do what was needed to keep Nortel a vibrant and viable telecom equipment supplier.
A series of strategic mistakes and an alarming lack of bold decisions over the past four years doomed Nortel at a time when the telecom market was becoming increasingly competitive. Long before it contemplated bankruptcy protection, Nortel should have reinvented itself and become more strategically focused.
But that didn’t happen under the watch of CEO Mike Zafirovski, so Nortel found itself without a dominant position in any market. As a result, it became financially vulnerable – a reality hammered home when the global economy slowed down last year, and Nortel’s financial options became more restricted.
Could the federal government played a more active role in saving Nortel? Perhaps.
But Nortel’s problems are far beyond a financial bail out. The company needed to be overhauled, streamlined and focused but it’s now too late in the game. If Nortel was going to be salvaged, it was a job that a new management team backed by new investors could have attempted. Then, Ottawa could played a supporting role.
More: The Globe & Mail reports that the Ontario government and some federal Liberals want Avaya’s $915-million purchase of Nortel’s enterprise business reviewed.
“These are high-quality jobs, created in part by government tax benefits, and the federal government has an obligation to review this deal, and to ensure that we have the maximum benefit to Canada,” Sandra Pupatello, Ontario’s Minister of Economic Development and Trade, told the G&M, adding Avaya executives will be meeting with her next week.
You can expect Avaya will convince Pupatello that Avaya is committed to keeping jobs in Ontario, which will show the electorate that Pupatello used her political clout to convince Avaya to do the right thing (whatever the “right thing” might be).
There are fraud trials on both sides of the border. There will be civil lawsuits here in the U.S. for sure, not sure about in CA. Following the civil lawsuits, the SEC and DOJ here will file charges and if you follow what has happened to countless (now ex) CEO's here such as on 8/29/09 ~ Rich McDonald ($200 mil security fraud conviction after 4 years of litigation), of course Madoff, Skilling, Ebbers, Kozlowski, etc..then you know that they are dead serious about putting these people away. So, while white collar crime may be met with leniency or nothing in your country, it is not here, and I will be following the trials in the years to come.
GoProto
“And this is where the Canadian/US government need to step in.” —————————————– There is pending action on both sides of the border.
GoProto
There are fraud trials on both sides of the border. There will be civil lawsuits here in the U.S. for sure, not sure about in Canada. Following the civil lawsuits, the SEC and DOJ here will file charges and if you follow what has happened to countless (now ex) CEO's here such as on 8/29/09 ~ Rich McDonald ($200 mil security fraud conviction after 4 years of litigation), of course Madoff, Skilling, Ebbers, Kozlowski, etc..then you know that they are dead serious about putting these people away. So, while white collar crime may be met with leniency or nothing in your country, it is not here, and I will be following the trials in the years to come.
GoProto
“And this is where the Canadian/US government need to step in.” —————————————– There is pending action on both sides of the border. See my earlier response below to Resigned From NT Not sure what will happen, but it will be something.
Ottawa Didn’t Kill Nortel; Nortel Killed Nortel
The Toronto Star published a silly editorial yesterday suggesting the federal government’s unwillingness to block Nortel’s sale of its CDMA business to Ericsson is playing a key part in letting “Nortel slip from our grasp”.
The editorial declared the decision shows that:
“…Clement and the federal government washed their hands of the sale to foreign interests of a key piece of Nortel, the one-time gem of Canada’s high-tech sector. While not surprising – the government is simply following the wishes of its friends in the right-wing media – it is nonetheless regrettable.”
That’s just hogwash.
First, the CDMA business was not a “key piece” of Nortel. The CDMA business is dying a slow death as the wireless world embraces GSM and next-generation technology such as LTE. If Nortel had been smart, it would sold the CDMA business long ago to generate much-needed cash rather than wait until it filed for bankruptcy protection so it could auction it off to the highest bidder.
Second, it’s completely off the mark to suggest Ottawa should play a role in deciding what assets Nortel should or shouldn’t keep. This is the responsibility of Nortel’s senior management team and board, which unfortunately failed to do what was needed to keep Nortel a vibrant and viable telecom equipment supplier.
A series of strategic mistakes and an alarming lack of bold decisions over the past four years doomed Nortel at a time when the telecom market was becoming increasingly competitive. Long before it contemplated bankruptcy protection, Nortel should have reinvented itself and become more strategically focused.
But that didn’t happen under the watch of CEO Mike Zafirovski, so Nortel found itself without a dominant position in any market. As a result, it became financially vulnerable – a reality hammered home when the global economy slowed down last year, and Nortel’s financial options became more restricted.
Could the federal government played a more active role in saving Nortel? Perhaps.
But Nortel’s problems are far beyond a financial bail out. The company needed to be overhauled, streamlined and focused but it’s now too late in the game. If Nortel was going to be salvaged, it was a job that a new management team backed by new investors could have attempted. Then, Ottawa could played a supporting role.
More: The Globe & Mail reports that the Ontario government and some federal Liberals want Avaya’s $915-million purchase of Nortel’s enterprise business reviewed.
“These are high-quality jobs, created in part by government tax benefits, and the federal government has an obligation to review this deal, and to ensure that we have the maximum benefit to Canada,” Sandra Pupatello, Ontario’s Minister of Economic Development and Trade, told the G&M, adding Avaya executives will be meeting with her next week.
You can expect Avaya will convince Pupatello that Avaya is committed to keeping jobs in Ontario, which will show the electorate that Pupatello used her political clout to convince Avaya to do the right thing (whatever the “right thing” might be).