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A ‘perfect storm’ sank hopes for Nortel, former board member says

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Note: The Skinny blog is written by Rick Smith, editor and co-founder of Local Tech Wire and business editor of WRAL.com.

RESEARCH TRIANGLE PARK, N.C. – A former member of the board at bankrupt Nortel Networks has finally broken the collective silence of that group to explain why they put the telecommunications gear maker into bankruptcy a year ago.

“We were in a perfect storm,” recalled John Manley in an interview with the Canadian Press that was published Sunday. “I think all of us maintained hope until the sales collapsed in the autumn of 2008.

“We always knew it was a long shot” to save the firm, he added.

Nortel declared bankruptcy on Jan. 14, 2009, and the company has been shedding workers along with operations ever since as it sells off assets to the highest bidders. The company’s RTP campus – that at its peak before the 2001 telecom and Netcom meltdowns employed more than 8,000 people – has just over 1,000 left.

Local Tech Wire and WRAL News have asked former North Carolina Gov. Jim Hunt to discuss his actions as a member of that board, but through a spokesperson he has declined comment.

Manley, a former Liberal finance minister in the Canadian government, joined the Nortel board in 2004 and was among the group that hired former Motorola executive Mike Zafirovski to come in as the savior in 2005.

Instead, Nortel went into bankruptcy and Mike Z. left along with most of the board.

“Was he the right choice? I can tell you there weren’t a lot of people with background in the industry with CEO skills,” Manley told the Canadian Press.

“They weren’t lining up, and Mike surprised us with his ability to attract a really high talent team of executives to try and make this go.”

Nortel also was badly hurt by the bloody departure of former CEO Frank Dunn and a series of financial scandals, Manley stressed.

Mike Z. brought in a new management team, engineered a reverse stock split, reorganized the company and much more. But his efforts foundered when the global recession took hold, Manley recalled.

“By October it was a crisis and by December the sales just went away,” Manley said in the interview.

Soon thereafter, Nortel's doom was sealed.

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The Skinny

WRAL Local Tech Wire Publisher and Editor Rick Smith dishes out tidbits from the local technology sector. Read more articles…