Technology giant Nortel Networks has filed for bankruptcy in the United States and Canada, making it the first major technology company to seek protection during the current global economic downturn.
“Nortel must be put on a sound financial footing once and for all,” said Nortel President and CEO Mike Zafirovski, in a statement. “These actions are imperative so that Nortel can build on its core strengths and become the highly focused and financially sound leader in the communications industry that its people, technology and customer relationships show it ought to be.”
The filing came a day before Nortel was due to repay a $107 million interest debt on bonds.
Nortel is the largest maker of telecommunications gear in North America—loosely, they make the gear that phone companies, mobile operators, cable operators, and many other industries use to roll out communications technologies and services.
The company says it is seeking protection with about $2 billion in cash on-hand, and has been attempting to rebound from an accounting crisis in 2005, while facing shareholder lawsuits, investigations, and internal turmoil—including the ouster of former CEO Frank Dunn. The company is blaming a sudden decline in equipment orders from telecommunications companies for forcing it to file for bankruptcy protection.
Nortel used to employ almost 95,000 people, and have a market capitalization approaching $300 billion at the height of the tech market bubble; the companies market value before the bankruptcy announcement was under $200 million.