Loss-making telephony vendor Nortel has filed for Chapter 11 bankruptcy to rectify its financial problems “once and for all”.
The Canada-based giant, which has haemorrhaged almost $7bn (£4.8bn) in losses since 2005, said the process will allow it to deal decisively with its cost and debt burden; restructure and narrow its strategic focus.
The move comes a month after the New York Stock Exchange gave Nortel six months' notice to bring its share price back above $1.
At the close of play yesterday, the vendor’s shares were trading at a pallid 32 cents.
Speculation that Nortel would file for bankruptcy protection has been rife since December, when reports emerged that it had taken legal advice on bankruptcy.
Mike Zafirovski, chief executive at Nortel, said: “Nortel must be put on a sound financial footing once and for all.
“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 are 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.”
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