Just as MCI was re-emerging from bankruptcy and a new report from Insight Research was predicting an end to the global telecom slump, the big news hit: telecom equipment giant Nortel Networks — a month after disclosing it was being formally investigated by the Securities and Exchange Commission in connection with the vendor’s restatement of financial results — announced the termination of its president and CEO, its former CFO and controller.
It’s like déjà vu all over again.
While we’ve all built up a tolerance for this sort of news over the past few years, it seemed the industry had finally gotten on the road to recovery. Then, this comes along and rains on the parade. But the analysts warned us that although things were stabilizing, we weren’t free and clear of bankruptcies and scandal; no industry ever is.
But the fact that it is Nortel — a marquee name in the equipment arena that has won Verizon’s VoIP business and been a major player in the hot wireless arena — going through this now is what is most surprising and troubling. Of course, size and good standing didn’t stop Enron,WorldCom or Martha Stewart from taking a fall.
I’m not suggesting that Nortel will follow in the footsteps of that notorious group. In fact, the trials and tribulations of these other companies may actually help Nortel better negotiate its problems. Rather than trying to circumvent the issue, the company is apparently moving quickly to address the problems. As Lynton (Red) Wilson, chairman of the board for Nortel Networks, said in announcing the executive changes, investigation and future financial restatements: “The board of directors believes that the actions announced today are about accountability for our financial reporting and are in the best interests of the company and all of its stakeholders, including our investors, customers and employees. These actions are an important step in the process of restoring confidence in the company’s leadership and financial reporting.”
Quickly addressing these issues so Nortel, its customers and the industry at large have a better understanding of what the future holds for the major vendor will obviously be best for all involved.
Yes, in time.
Until next time,
Paula Bernier
Editor in Chief
