Posts Tagged ‘Canadian Business’

Nortel Assets Find New Home

Much to the annoyance of RIM, Sweden’s Ericsson has emerged the winner in the bid for Nortel Networks Corp.’s wireless division. Research in Motion claimed that they had been blocked from the bidding process. Not surprising.

The quest of the current government to divest or sell off Canadian assets stretches further than nuclear isotopes. Jim Balsillie, RIM’s co-chief executive officer stated,

“RIM is extremely disappointed that Nortel’s world leading technology, the development of which has been funded in part by Canadian taxpayers, seems destined to leave Canada and that Canada’s own Export Development Corporation is preparing to help by lending $300 million to another bidder. RIM remains extremely interested in acquiring Nortel assets through a Canadian ownership solution that would serve the dual purpose of keeping key wireless technologies in Canada and extending RIM’s leadership in the research, development and distribution of leading edge wireless solutions, but RIM has found itself blocked at every turn.”

Selling off Canadian innovation in our national interests to keep seems counter-intuitive, but not to the current helm at Industry Canada. Hate to think how they will handle a tourism portfolio when Jim Flaherty has mentioned he may sell off Via Rail.

Yes, the addition of The Marquee Tourism Events Program (MTEP) to Indusrty Minister’s (Tony Clement) plate comes after sexy isotopes and hopes to privatize nuclear medicine in Canada. The tourism portfolio inheritance comes with the turfing of junior cabinet minister Diane Ablonczy (likely over $400,000 of funding to the Toronto Pride Parade). Marry this off with further sell offs of Canadian patents and technology and the new “Conservatives” are taunting the opposition and adding fuel to the election fire.

Well a fight seems to be brewing at least here at Queen’s Park. Dwight Duncan, Ontario’s finance minister, feels that technology funded with Canadian taxpayer money shouldn’t easily be sold off to a foreign company.

The Nortel Shell Game

It’s not every day that you see a company with a 127-year history in Canada dissolve before your eyes. Or is it? North America’s biggest maker of phone gear filed for bankruptcy protection in January of this year. I’m sure that in the current climate refinancing their debt is difficult but this downward spiral has been mounting.

Bankruptcy protection, at least these days, is nothing new. Nor is the mismanagement of Nortel, as recently as 2007 the company paid a $35 million fine to settle U.S. Securities and Exchange Commission claims that it was manipulating earnings from 2000 to 2003. Lately executives have been touting a renewed focus on stabilizing its customer and supplier base but one must follow the money.

The company had been hoarding cash leading up to its bankruptcy filing and had been slow to pay severance payments. After a fight that went to Ontario Superior Court, Nortel was allowed to pay $45 million in bonuses for close to 1,000 executive and nonexecutive employees (including the eight senior executives). With thousands let go you it’s not hard to think of how many current or former employees feel. The gravy train is coming to a halt. The fire sale has begun. The demise of Nortel is criminal, but many will say this is business as usual.

Only a matter of time until Nortel will be delisted from the TSX. Nortel was Canada’s most widely held and valuable company (one of the few “dot com” companies with real assets) worth over $350 Billion and employing 95,000. Now it’s worth a few hundred million and employs less than half that staff count! Pity.

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