Important Nortel News

Nortel has officially filed for bankruptcy protection, in a bid to be on “sound financial footing once and for all.”

In a statement, Nortel detailed its bankruptcy filing. And while it’s unlikely that Nortel will garner new customers it has a lot of existing ones that may be worried.

Here’s what you need to know:

Nortel has filed Chapter 11 bankruptcy proceedings and will restructure accordingly;

Nortel will continue daily operations as usual. The Company cut a deal with Flextronics, its contract equipment manufacturer, to maintain its supply chain. Nortel has agreed to buy $120 million in existing inventory by July 1. Nortel will also make other inventory purchase quarterly. Translation: Nortel has an inventory glut to work through. Flextronics has terminated some parts of its Nortel contract effective in July. The Company said it will continue to support its products and continue to invest in research and development. The upshot is that not a lot will change initially under this bankruptcy proceeding for existing customers.

What’s unclear is whether the company will be split up in parts as previous reports have noted. Nortel did say that it will “deal decisively with its cost and debt burden, to effectively restructure its operations and to narrow its strategic focus in an effective and timely manner.”

Nortel CEO Zafirovski said:

“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. I am confident that the actions we’re announcing today will be the fastest, most effective means to translate our improved operational efficiency, double-digit productivity, focused R&D and technology leadership into long-term success. I want to reaffirm Nortel’s dedication to delivering world-class solutions and services to customers.”

Cory Stephens, CEO of Intelli-Flex, has stated:

"Intelli-Flex is committed to standing behind Nortel through this reorganization while recognizing that our customers have concerns during these difficult times. That being said, it is still an exciting time to be in technology since that is what shapes the future.

With 16 plus years of consulting, designing and implementing IT systems, Intelli-Flex will continue to deliver positively-impacting solutions to our customers."

To contact Intelli-Flex about any Nortel concerns, please call 1 (800) 435-3911.

Dear Friends of Nortel,

Today, Nortel is filing for creditor protection in Canada, the United States and Europe in order to undertake a comprehensive business and financial restructuring. I firmly believe these are the right steps toward a solution for our company. This process will enable Nortel to become the highly focused and financially sound communications leader it should be.

Most importantly, Nortel is still very much in business and our commitment to customers remains unwavering. We will continue to invest in leading edge R&D to deliver the value our customers expect from us.

To all our stakeholders - including customers, suppliers and employees -- please know that this decision was not taken lightly. I can assure you we explored every possible alternative, sought a variety of solutions, and engaged in extensive consultation with our Board of Directors and many other experts.

I am convinced that by choosing this path at this time, we can put Nortel on sound financial footing once and for all. It will allow us to deal decisively with our cost and debt burden, restructure our business and narrow our strategic focus in an effective and timely manner.

Sincerely,

Mike Zafirovski,

President and CEO, Nortel