Nortel bankruptcy reaction remains positive

Despite Nortel’s (TSX:NTL)bankruptcy and creditor protection filings last Wednesday, Peter Diniz, vice-president and general manager of San Jose, Calif.-based value-added distributor, Bell Microproducts Inc.’s Canadian division, said he remains optimistic towards the state of his and Nortel’s businesses moving forward.

Bell Micro, which Diniz says has been a supplier to Nortel for over 15 years, sells custom server systems, storage sub-assemblies and associated component piece parts to the company.

After Nortel filed for Chapter 11 bankruptcy protection in the U.S. last week, the company’s CEO, Mike Zafirovski, wrote in a letter, which was posted on the company’s Web site that this decision was made “to undertake a comprehensive business and financial restructuring.” He went on to write that “Nortel is still very much in business and our commitment to customers remains unwavering.”

The vendor’s more than U.S.$7 billion debt and growing since 2005 had forced the vendor to lay off thousands of it employees in an effort to stay afloat last year.

However, this proved not to be enough since the company was eventually forced to file for bankruptcy and seek creditor protection.

In response to Nortel’s unfortunate financial standings, Diniz said the company’s decision to file for bankruptcy “wasn’t a big shock” to him.

“There’s been much speculation around the state of Nortel and yes we’ve had concerns, but we’ve been guarded in terms of managing our exposure and relationship with them,” Diniz explained.

Diniz said despite Nortel’s current money-troubles, Bell Micro will continue to support its long-standing relationship with the company.

And while it’s still too early to say what the outcome of Nortel’s financial and business situation will be, Diniz said partners who have taken the time, money and who have invested a relationship in Nortel should not give up just yet.

“I think it’s pre-mature for any Nortel partner to start getting ahead of themselves,” Diniz said. “At Bell Micro, we’re still waiting to hear the go-forward plans so we can make an informed decision. I give Nortel credit for being really transparent with their position now.”

As reported in a IT World Canada (publishers of CDN) story last week, depending on how bad things get for Nortel, if worse comes to worse, the company may be broken up and parts of it could be sold off to help raise money to settle any outstanding debts.

Diniz, who remains optimistic about Nortel’s current situation, says he has hope that Nortel will be able to come out of this as a viable company and as a business that Bell Micro can continue its customer-supplier relationship with.

“If Nortel were to fail…that would have a negative impact locally on my business,” Diniz said.

However, (I’m) not willing to comment on the severity of risk and the order of magnitude that this business represents.”

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Maxine Cheung
Maxine Cheung
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