Nortel Networks

From Academic Kids

Nortel Networks Corporation
Missing image
Nortel logo

Type Public Template:Tsx Template:Nyse
Founded Montreal, Quebec (1895)
Location Brampton, Ontario
Key people William Owens - Vice Chairman & CEO
Industry Telecommunications
Revenue image:red down.png$9.82 billion USD
Operating Profit image:red down.png$4.08 billion USD

Nortel formerly known as Northern Telecommunications Networks, is a telecommunications equipment manufacturer headquartered in Canada.


In 1895, Bell Telephone Company of Canada decided to spin off its manufacturing arm to build phones for sale to other companies as well as other devices such as fire alarm boxes and street call boxes for police and fire departments. This company was incorporated as the Northern Electric and Manufacturing Company Limited. In 1900, the new company began manufacturing the first wind-up gramophones that played flat discs. In 1913, the company's headquarters and main factory was built in Montreal. In 1914, the company merged with Imperial Cable to form Northern Electric, co-owned by Bell Canada and the U.S. company Western Electric. By the end of the war, Northern Electric had become a major distributor of Western Electric appliances across Canada.

In 1922, Northern Electric started manufacturing radios. In 1928, it produced the first talking movie sound system in the British Empire for a theatre in Montreal. In 1949, an anti-trust suit in the U.S. forced AT&T/Western Electric to sell its stake in Northern Electric to Bell Canada. 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.

In 1966, the company's research lab, 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 U.S. market with its switching systems. In 1972, it opened its first factory in the U.S. in Michigan. In 1975, Northern began shipping its first digital switching systems, one of the earliest such systems to be sold.

In 1976, the company name was changed to Northern Telecom Limited, and management announced its intention to concentrate the company's efforts on digital technology.

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

As Nortel Networks, the name that evolved after the 1998 acquisition of Bay Networks, the company re-engineered itself into an Internet communications business, offering complete solutions for multiprotocol, multiservice, global networking.

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 price of the company's shares to unheard of levels despite the company's repeated failure to turn a profit. Under the leadership of CEO 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, Nortel was to become one of the most spectacular casualties.

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), Canada's largest. Nortel's market capitalization fell from CDN$398 billion in September 2000 to less than $5 billion in August 2002. Nortel's stock price plunged from CDN$124 to $1.50. When Nortel's stock crashed, it took with it a wide swath of Canadian investors and pension funds, and threw 60,000 Nortel employees out of work. CEO John Roth retired under controversy to be succeeded by former CFO Frank Dunn. Despite some initial perceived success in turning the company around, he was fired for cause in 2004 after being accused of financial mismanagement.

In late 2004, the "Networks" was dropped, and the company is currently known simply as Nortel.

Today's business structure

Nortel now employs about 30,000 people worldwide.

Nortel Networks is a long established industry leader in delivering end-to-end carrier grade telecommunications network infrastructure and solutions. The company has decades of experience in delivering robust, fault tolerant, software architectures and the know-how to scale to millions of users and manage thousands of network elements. Nortel Networks has deep and broad experience spanning the key areas in telecommunications – optical transmission, wireless, voice, multimedia, and packet networking and associated services.

Nortel’s service provider customers include some of the world’s largest public network carriers, including wireline, wireless, and cable operators. Enterprise customers include small, medium, and large businesses and institutions, and span multiple sectors, including financial services, health care, education, retail, and Government. Nortel serves 9 out of 10 North American Fortune 500 companies, and worldwide, their installed base of products represents more than 50 million enterprise users.

Headquartered in Brampton, Ontario, (just west of Toronto), the company has other key locations across Canada. Ottawa, the capital of Canada, is home to the company’s largest R&D center. There are also sales and support offices throughout Western and Central Canada, Quebec and the Maritimes.

The company expanded into the U.S. in 1971. Today there are employees in over 100 locations in the U.S. with R&D, software engineering, and sales centers in many states including California, Florida, Georgia, Maryland, Massachusetts, North Carolina, Texas, and Virginia.

Nortel has significant presence in Europe, Middle East, Africa, the Caribbean, and Latin America. Nortel delivers network infrastructure and communication services to customers in 17 countries across Asia including China, Hong Kong, Korea, Japan, Singapore, Thailand, Malaysia, India, Pakistan, Australia, and New Zealand. In addition, the company has 3 joint ventures in China.

Nortel has long been a main equipment supplier to Bell Canada, a role similar to Western Electric in the USA. A key product in the 1980s and 1990s was the DMS family (Digital_Multiplex_System) of switches. These switches replaced the old electro-mechanical and stored program control switches used in local phone networks and to build and expand long distance networks. The DMS family has evolved into the Succession platform which brings Voice over IP technology to the switch platform.

Key products for the Enterprise market include the Meridian 1 PBX and the Norstar key system. The Meridian 1 is aimed at large to medium-sized businesses. The Norstar key system is aimed at small business and branch offices and provides many of the same features as the Meridan 1 PBX.

On May 26, 2004, former Canadian Minister of Finance John Manley was named to the board of directors.

In March 2005 Nortel's recovery took a downturn when they posted a significant loss for the quarter.

In its report, filed March 18, 2005, Nortel reported a third-quarter loss of $259 million, or 6 cents a share, compared with a restated third-quarter 2003 profit of $131 million, or 3 cents a share.

In 2004, Nortel Networks changed its name to simply "Nortel".

External links

de:Nortel Networks


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