Nortel Networks

The company that got its start in 1895 as the manufacturing arm of Bell Telephone of Canada -- just shortly after the invention of the telephone itself -- has become a world leader in the hugely competitive telecommunications industry. In the Internet age, as voice and data converge, Nortel has transformed itself from a hardware manufacturer into a new economy powerhouse built more on software, wireless technology, and fiber optics.

No company over 100 years old is without its ups and downs. And Nortel is no exception. Nortel Networks: How Innovation and Vision Created a Network Giant recounts the drama of a technology company that has survived two World Wars, the Great Depression, and numerous recessions. The cast of characters is full of fascinating people who worked together to build a corporate empire -- CEOs that steered Nortel perilously close to the rocks of ruin, and leaders that gave the company the vision that allowed it to soar to new heights; dedicated scientists and engineers who drove the innovations that have kept Nortel at the front of the pack; politicians and regulators with their own agendas; contacts and customers around the globe that each had a role to play in the Nortel story.

Over its long history, Nortel has gone through several corporate shake-ups. These frequent transformations have kept the company lean and focused, a battle-hardened veteran well prepared to deal with turbulence and confrontation. In fact, it is out of disruption and discontinuities in markets, products, and technologies that Nortel has emerged triumphant many times over. They have been what Nortel looks for in order to survive and gain position. The legacy is an entrenched culture of change, speed, and innovation.

Whether through in-house research and development, or through its recent and ongoing frenzy of acquisitions, Nortel continues to produce leading-edge product portfolios at just the right time. From the manually operated telephone switchboards of the 1890s to the digital switches that today direct voice, data, and video traffic on the fiber-optic systems of the Internet, Nortel has been at the forefront of technological innovation for over 100 years.

The company's relentless commitment to R&D has enabled it to move from old technology to new technology many times over, in times of crisis and prosperity. Today, Nortel is at the forefront of laying down the information superhighways now revolutionizing the lives of everybody everywhere.

Nortel's annual revenues have seen almost uninterrupted growth, going from approximately $200 million in the early 1960s to $22 billion in 1999. In the process, its common shares, first listed in 1973 on the Toronto Stock Exchange (and a few years later on the New York, London, and Tokyo exchanges), have made long-term investors very wealthy. The first ten years of trading, to 1983, brought an appreciation of over 1,000 percent. After a period of drifting in the 1980s, the stock price resumed its upward trend with vigor in the 1990s. The final two years of the decade were especially strong, when the share price quadrupled from the 1998 low.

In Nortel Networks, Larry MacDonald brings insight and a strong sense of where the company is headed. He takes the story from the humblest beginnings, right up to the present day, and looks into the future at some of the possible outcomes of Nortel's strategies to become the world leader in the new digital revolution.

Contents

• Acknowledgements ..... ix
• A Brief History of Nortel Networks ..... xi
• Key Executives in the History of Nortel Networks ..... xxiii
• introduction: The Battle to Build the Internet ..... xxvii
• Chapter 1: Good Vibrations: Bell's Telephone ..... 1
• Chapter 2: Nortel's Baby Steps ..... 11
• Chapter 3: A Triumvirate Wakes a Sleepy Company ..... 25
• Chapter 4: Good Beginnings and False Starts ..... 39
• Chapter 5: The Switch to Digital ..... 51
• Chapter 6: The Dance of the Regulators ..... 71
• Chapter 7: Going Global ..... 85
• Chapter 8: Full Speed a Stern ..... 109
• Chapter 9: Monty and the Python: Fighting the Squeeze ..... 133
• Chapter 10: Roth's Wireless Feat ..... 161
• Chapter 11: The Vision Thing: Webtone ..... 175
• Chapter 12: Turning on a Dime ..... 187
• Chapter 13: Trump Card in the Internet Stakes: Fiber Optics ..... 203
• Chapter 14: Looking Ahead ..... 223
• Endnotes ..... 241
• Index ..... 253