Nortel

Nortel Networks Corporation, formerly Northern Telecom Limited, was a Canadian multinational telecommunications and data networking equipment manufacturer headquartered in Ottawa, Ontario. It was founded in Montreal, Quebec, in 1895 as the Northern Electric and Manufacturing Company, or simply Northern Electric. Until an antitrust settlement in 1949, Northern Electric was owned mostly by Bell Canada and the Western Electric Company of the Bell System, producing large volumes of telecommunications equipment based on licensed Western Electric designs.

At its height, Nortel accounted for more than a third of the total valuation of all companies listed on the Toronto Stock Exchange (TSX), employing 94,500 people worldwide. In 2009, Nortel filed for bankruptcy protection in Canada and the United States, triggering a 79% decline in its corporate stock price. The bankruptcy case was the largest in Canadian history and left pensioners, shareholders, and former employees with enormous losses. By 2016, Nortel had sold billions of dollars in assets. Courts in the US and Canada approved a negotiated settlement of bankruptcy proceedings in 2017.

History Origins Alexander Graham Bell conceived the technical aspects of the telephone in July 1874, while residing with his parents at their farm in Tutela Heights, on the outskirts of Brantford, Ontario.Bruce 1990, pp. 122–123. He later refined its design at Brantford after producing his first working prototype in Boston. Canada's first telephone factory, created by James Cowherd of Brantford, was a three-storey brick building that soon started manufacturing telephones for the Bell System, leading to the city's style as The Telephone City. Field, F.A. "The First Telephone Factory", Blue Bell (magazine), The Bell Telephone Company of Canada, January 1931. Retrieved April 22, 2012.

After Cowherd's death in 1881 which resulted in the closure of his Brantford factory, a mechanical production department was created within the Bell Telephone Company of Canada and production of Canadian telephone equipment was transferred to Montreal in 1882 to compensate for the restrictions on importing telephone equipment from the United States. In addition to telephones, four years later, the department started manufacturing switchboards, at first the 50-line Standard Magneto Switchboard. The small manufacturing department expanded yearly with the growth and popularity of the telephone to 50 employees in 1888. By 1890 it had been transformed into its own branch of operations with 200 employees, and a new factory was under construction.

As the manufacturing branch expanded, its production ability increased beyond the demand for telephones, and it faced closure for several months a year without manufacturing other products. The Bell Telephone Company of Canada's (later renamed to Bell Canada) charter prohibited the company from building other products. In 1895, Bell Telephone of Canada spun off its manufacturing arm to build telephones for sale to other companies, as well as other products, such as fire alarm boxes, police street call boxes, and fire department call equipment. This company was incorporated as the Northern Electric and Manufacturing Company Limited.

Northern Electric and Manufacturing Company Northern Electric and Manufacturing Company Limited was incorporated on December 7, 1895. The initial stock capital was $50,000 at $100 per share, with 93% held by the Bell Telephone Company of Canada and the remainder held by seven corporate directors. The first general stockholders meeting was held on March 24, 1896.

In December 1899, The Bell Telephone Company of Canada bought a cabling company for $500,000; a Canadian charter named it "The Wire and Cable Company". Northern Electric and Manufacturing further expanded its product line in 1900, manufacturing the first Canadian wind-up gramophones that played flat discs. In 1911 the Wire and Cable Company changed its name to the "Imperial Wire and Cable Company".

Northern Electric Company

The construction of a new manufacturing plant started in 1913 at Shearer Street in Montreal, Quebec, as preparations began for the two manufacturing companies' integration. Then, in January 1914, the Northern Electric and Manufacturing Company and the Imperial Wire and Cable Company merged into the Northern Electric Company, commonly known simply as Northern Electric. The new company opened the doors on a new manufacturing plant in January 1915. This facility, located on Shearer Street, was the primary manufacturing centre until the mid-1950s. Edward Fleetford Sise was the president and his brother Paul Fleetford Sise was the vice-president and general manager.

During the First World War, Northern Electric manufactured the Portable Commutator, a one-wire telegraphic switchboard for military operations in the field. In 1922, Northern started to produce, for $5, the "Peanut" vacuum tube, which required only a single dry-cell battery. The use of alternating current was still under development during this time. The Northern Electric Peanut tube was the smallest tube made and drew only one-tenth of an ampere. During the 1920s Northern Electric made kettles, toasters, cigar lighters, electric stoves, and washing machines. In January 1923, Northern Electric started to operate an AM radio station with call letters CHYC, in the Shearer Street plant, and much of the programming was religious services for the Northern Electric employees and families in the community. In July 1923, CHYC-AM was the first radio station to provide entertainment to the riders of the transcontinental train, in a parlor car fitted with a radio set to receive the broadcast as it left Montreal and traveled west. Later in the 1920s, Northern created the first talking movie sound system in the British Empire for a theater in Montreal.

During the Great Depression in the 1930s, Northern Electric was affected, like most other companies. From the beginning of 1930 through the end of 1933, sales dropped from $34 million to $8.2 million, with employees dropping from 6,100 to 2,400.

Independence from Western Electric

In 1949, an antitrust suit in the United States forced AT&T/Western Electric to sell its stake in Northern Electric to Bell Canada. AT&T spun off Northern Electric in 1956. Deprived of its Western Electric tie, Northern began developing its own products. In 1953, Northern Electric produced its first television sets using tubes made by RCA. Bell Canada acquired 100 percent of Northern Electric in 1964; through public stock offerings starting in 1973, Bell's ownership of Northern Electric and its successors would be reduced, though it continued to have majority control.

In 1966, the Northern Electric research lab, Northern Electric Laboratories (the predecessor to Bell-Northern Research), started looking into the possibilities of fibre optic cable, and in 1969, began work on digitizing telephone communications. Also in 1969, Northern began making inroads into the US market with its switching systems. In 1972, it opened its first factory in the US in Michigan. In the late 1960s and early 1970s, Northern began shipping its first digital switching systems, one of the earliest such systems to be sold.

Northern Telecom was, with Bell-Northern Research, in the early 1970s a part owner of MicroSystems International, a semiconductor manufacturer based in Nepean, outside Ottawa.

In 1978, Northern Telecom acquired Data 100 and Sycor, both American terminal manufacturers respectively based in Minneapolis, Minnesota, and Ann Arbor, Michigan. Nortel subsequently established Northern Telecom Systems Corporation (NTSC), a computer systems manufacturer in the United States the following year.

Northern Telecom and "Digital World"

In March 1976, the company name was changed to Northern Telecom Limited, and management announced its intention to concentrate the company's efforts on digital technology. Northern Telecom was the first company in its industry to announce and deliver a complete line of fully digital telecommunications products. The product line was branded "Digital World" and included the DMS-100, a fully digital central office switch serving as many as 100,000 lines, which was a key contributor to the company's revenue for close to 15 years.Starting in 1977, Nortel grew rapidly after the introduction of its DMS line of digital central office telephone switches, especially after the AT&T breakup in 1984. Northern Telecom became a significant supplier in Europe and China and was the first non-Japanese supplier to Nippon Telegraph and Telephone.

Deregulation 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.

As Nortel, the streamlined identity it adopted for its 100th anniversary in 1995, the company set out to dominate the global market for public and private networks.

Optical boom and bust

In 1998, with the acquisition of Bay Networks, the company's brand name was changed to Nortel Networks to emphasize its ability to provide services related to other communications network technologies. As a consequence of the stock transaction used to purchase Bay Networks, BCE ceased to be the majority shareholder of Nortel.

In 1999, Nortel outsourced several of its manufacturing operations to North American contractors.

During the optical networking boom, Nortel sought to bolster its long-haul optical transmission capabilities by acquiring Qtera Corporation, a Boca Raton, Florida-based startup specialised in ultra-long-reach, all-optical systems that enabled data transmission over distances up to 2,500 km without signal regeneration, thereby reducing costs and improving network efficiency. The deal was announced in December 1999 for US$3.25 billion in Nortel common shares.

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.

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 company's share price to unheard-of levels despite the company's repeated failure to turn a profit. Under the leadership of chief executive officer 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 late in the year 2000, Nortel was to become one of the major casualties. Nortel's revenues would be dented by a saturated market and the failure of WorldCom, which was a major customer.

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), employing 94,500 worldwide, with 25,900 in Canada alone. Nortel's market capitalization fell from C$398 billion in September 2000 to less than C$5 billion in August 2002, as Nortel's stock price plunged from C$124 to C$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. Roth was criticized after it was revealed that he cashed in his own stock options for a personal gain of C$135 million in 2000 alone.

Roth retired in 2001. His planned successor, chief operating officer Clarence Chandran, already on sick leave due to complications following his 1997 stabbing in Singapore, decided to quit, however. Chief financial officer Frank Dunn was eventually chosen as Roth's permanent replacement.

After the Internet bubble

Accounting restatements