All those investors who have remained loyal to telecommunications gear maker Nortel Networks Inc., as its shares have lost more than 95 percent of their value, will finally get to hear company management outline its comeback strategy next week when the company hosts a shareholder meeting in Toronto.
Nortel has not held such an event for two years because of the disruption from an internal accounting crisis and it continues to suffer from such distractions as the recent departure of top executives hired from Cisco Systems Inc. in an attempt to breathe new life into the company. Through it all, Nortel has strived this year to put internal housekeeping matters behind it and stay focused on rebuilding its market share in established and newer segments of the business.
The Ottawa Citizen this week published a detailed account of the missteps the company has made over the past 17 years, outlining why it was slow to enter the key wireless market from the get-go, why it has continued to lose market share even in this latest period of growth following the prolonged telecom bust, and why the company may be still feeling the effects of mistakes in made back in the late 1980s when wireless emerged as a cutting-edge technology.
The report says Nortel was reluctant to enter the wireless business from the start, not because of the daunting technological challenges, but because of a perceived conflict of interest. Two decades ago, Nortel did most of its business selling switching systems to established telephone companies, and, the Citizen says, top executives thought it would be a mistake to upset their best customers by selling wireless gear to their rivals. That misjudgment proved costly. Nortel, which last year ranked fifth overall as a supplier of wireless gear, is still playing catch-up with competitors who saw the size of the wireless opportunity early on. The Citizen report downplays Nortel's claims that it is a leader in the so-called "beyond 3G wireless" market, saying Nortel's wireless division remains a major source of vulnerability for the entire company. — Andrea Orr
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