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Question: Introduction to Nortel Corporation

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Nortel Networks Corporation, commonly known as Nortel, was a major Canadian multinational telecommunications and data networking equipment manufacturer. It played a significant role in the development of telephone and internet infrastructure worldwide.

Founding and Early History

Nortel originated in the late 19th century as part of Canada’s telephone industry. It was founded in 1895 in Montreal, Quebec, as the Northern Electric and Manufacturing Company, serving as the manufacturing arm for the Bell Telephone Company of Canada (later Bell Canada). The company produced telephones, switchboards, and other equipment, evolving from analog systems to digital technologies in the 1970s and 1980s.

Growth and Rebranding

In the mid-20th century, it became Northern Telecom, focusing on telecommunications equipment. By the 1990s, it shortened its name to Nortel and shifted toward data networking. A pivotal move came in 1998 with the acquisition of Bay Networks, a leader in routers and networking, leading to the rebranding as Nortel Networks in 1999 to emphasize its focus on internet and IP-based solutions.

Peak During the Dot-Com Boom

At its height around 2000, Nortel was one of the world’s most valuable companies, with a market capitalization exceeding $350 billion CAD. It employed nearly 95,000 people globally and dominated markets in optical networking, wireless technology, and enterprise systems. The company powered much of the internet backbone during the late 1990s tech boom, benefiting from massive demand for fiber-optic equipment.

Decline and Bankruptcy

The dot-com bubble burst in 2000-2001 severely impacted Nortel, as overcapacity in optical networks led to plummeting revenues. Aggressive acquisitions (often overpaid), accounting scandals, executive misconduct allegations, and failure to fully adapt to shifting technologies contributed to its downfall. The company filed for bankruptcy protection in 2009—the largest in Canadian history—and began liquidating assets.

Legacy

Its businesses were sold off to competitors: enterprise solutions to Avaya, metro Ethernet to Ciena, wireless assets to Ericsson, and a major patent portfolio (over 6,000 patents) for $4.5 billion USD to a consortium including Apple, Microsoft, and others. Nortel ceased to exist as an independent entity by the mid-2010s, with final creditor payouts in 2017. It remains a cautionary tale of boom-and-bust in the tech sector, significantly affecting Canada’s economy and Ottawa’s tech hub.

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