On July 9, 1877, Alexander Bell, the inventor of the telephone patent, officially founded the Bell Telephone Company in the United States.

Three years later, in 1880, the Bell Telephone Company established a branch in Montreal, Canada, which was called Bell Canada.

Two years later, on July 24, 1882, Bell Canada established its own mechanical department to develop and manufacture telephone equipment. At the beginning of the establishment of the department, there were only 3 people.

With the continuous expansion of business, the scale of this machinery department has become larger and larger.On December 7, 1895, this department was finally independent and becameNorthern Electric and Manufacturing Company (Northern Electric and Manufacturing Company)。

The company’s first president, Charles Fleetford Sise (Charles Fleetford Sise)

In 1902, the number of employees in the North Electronic Manufacturing Company had reached 250 people, covering an area of ​​more than 4,000 square meters.

▲ The building of Northern Electronics Manufacturing Company (1902)

In 1914, the Northern Electronics Manufacturing Company merged with another subsidiary of the Bell Telephone Company in Canada, the Imperial Wire and Cable Company (Imperial Wire and Cable), and becameNorthern Electric Co. Ltd。

▲ Merger ceremony (Saint Lawrence Hall in Montreal)

The main shareholders of this new company are Canadian Bell Company and Western Electric.Both hold 50% and 44% of the shares。

In fact, to put it plainly, Northern Electronics is the property of AT&T (American Telephone and Telegraph Company). Western Electronics is AT&T’s manufacturing plant in the United States, and Bell Canada is the Canadian branch of AT&T. Northern Electronics is the Canadian branch of Western Electronics.

At that time, Northern Electronics basically did not have any independent research and development capabilities, and could only rely on the technology authorization of Western Electronics for production. In addition to telephone switching equipment, Northern Electronics also produces some civilian electronic products, such as phonographs, televisions, amplifiers, and stereos.

In 1915, when the First World War broke out, Northern Electronics began to manufacture military communication equipment, such as portable switchboards and field communication phones.

▲ Field communication equipment produced by Northern Electronics during World War I

In addition to communication equipment, they also make artillery shells.

▲ Female workers in the northern electronics factory who are making shells

After the end of the First World War, the company of Northern Electronics further expanded, with dozens of offices across Canada. They not only produced various wireless transmitters and broadcasting equipment, but also produced Canada’s first vacuum tube and the first sound film system.

Soon after, the Great Depression broke out and Northern Electronics was also affected. The company’s performance fell sharply, and it was forced to lay off two-thirds of its employees.

In 1939, Canada officially announced its entry into World War II, and Northern Electronics once again fully turned to serve the military industry. At that time, their main products included radios, radars, fuzes, etc.

▲ The World War II poster of Northern Electronics

During World War II, there were about 30,000 Allied tanks equipped with radio devices produced by Northern Electronics. The Royal Canadian Navy is the main customer of Northern Electronic Microwave Radar products.

At the end of the war, Northern Electronics’ sales had increased by 2.5 times.Number of employees increased from 5000 to 8000。

More importantly, due to the widespread popularity of Northern Electronics’ products during the war, many allied countries simply cited Northern Electronics’ technical standards as their national standards. When it was rebuilt after the war, Beifang Electronics received a large number of orders and made a lot of money.

Strengthen independent research and development, enter the field of science and technology

In the 1950s, Northern Electronics ushered in a major change.

At that time, the US Department of Justice filed an antitrust lawsuit against AT&T. One of the results of the lawsuit,That is, Western Electronics must sell all its shares (40%) of Northern Electronics to Bell Canada。

Western Electronics withdrew its shares, causing Northern Electronics to lose its main source of technology. In desperation, they can only buy the technology of other local companies, and at the same time step up their own research and development capabilities.

▲ LOGO of Northern Electronics (1950)

In the early 1950s, Northern Electronics started the research and development of electromechanical switching technology and adopted phototransistors.

In 1953, Northern Electronics developed an electronic meter format television using RCA picture tubes.

In 1958, Beifang Electronics’ construction was completedThe longest microwave system in the world at that time-Trans-Canada Skyway. The system has a total of 6114.2 kilometers (3800 miles) and cost 50 million U.S. dollars.

▲ Wiring of the microwave system

▲ Posters at the time

In the same year, Northern Electronics established the Northern Electronics Laboratory with more than 30 employees.

In the 1960s, Northern Electronics continued to increase R&D investment.

In 1965, they invested 60 million U.S. dollars,Started an important research project, that is the SP-1 exchange system. This system was put into the market after the research and development was completed in 1969. It was a huge success and brought huge profits to the company.

▲ The central processing rack of SP-1

In 1971, Northern Electronics merged its R&D department with the R&D department of Bell in Canada and established BNR (Bell Northern Research). BNR has three main research directions, namelyPrivate branch exchange (PBX), low-capacity public exchange, and large-capacity public exchange。

▲ LOGO of BNR

A year later, BNR introduced the first electronic switch, SG-1, also known as PULSE PBX. The technology of this PBX is far ahead of its opponents, selling 6000 units within three years.

▲ SG-1 poster (the white one is the phone terminal, the blue one is the PBX)

▲ The appearance and internal structure of SG-1

In 1973, Northern Electronics was listed on the Toronto Stock Exchange. At that time, Bell Canada held 90.1% of their outstanding shares.

In 1975, Northern Electronics was listed on the New York Stock Exchange. This year, the number of manufacturing plants of Northern Electronics increased to 24 (including 6 in the United States), the number of employees exceeded 20,000, and the sales exceeded US$1 billion.

Soon after, they launched their first commercial all-digital switching system-SL-1.

In 1976,Northern Electronics officially renamed the company Northern Telecom (Northern Telecom)。

▲ The evolution of LOGO (the bottom is the early LOGO of Northern Telecom)

In 1979, Northern Telecom launchedFull-featured digital switch product——DMS-100, Once again achieved great market success.

▲ Northern Telecom DMS100

This product has helped Northern Telecom further expand its overseas markets, entering Japan, China and Eastern European countries.

In the 1980s, Nortel strengthened its expansion in the Asian market.In 1983, Northern Telecom sold the first digital switch to China. In 1985, Nortel became the first non-Japanese company to install a large all-digital PBX in Japan.

After AT&T was split in 1984, Northern Telecom took advantage of the vacancy and took advantage of a large share of the US market. Their sales of digital switches have increased by 12 times compared to 1976. By the end of the 1980s, Northern Telecom’s share of the digital switch market in the United States had reached more than one-third.

Legendary CEO comes on stage, ushering in a golden age

Northern TelecomThe world’s sixth largest telecommunications companyHis identity has entered the 90s.

At that time, their goal was to become the world’s number one communications equipment supplier in 2000.

However, just when they were complacent, they poured a basin of cold water on their faces.

In January 1991, Northern Telecom purchased a large British telecommunications company, STC PLC, for approximately US$2.6 billion.

Although this acquisition has made Northern Telecom’s world ranking third, it has also increased their debt scale. At the time, their total debt was approximately C$4.3 billion, accounting for 50% of the equity.

The huge debt puts heavy pressure on Northern Telecom. At the same time, their backyard started to catch fire.

then,Their digital switch has a serious software problem, And failed to repair and update in time, causing user dissatisfaction and complaints, and sales plummeted.

After the decline in sales revenue, the company’s CEO Paul G. Stern not only did not increase R&D investment, but to improve short-term profitability data.Reduced R&D expenditure。

This decision further damaged the company’s R&D capacity reserves and exacerbated product quality problems.

Soon after, in 1993, the Northern Telecom board removed Stern’s CEO position and arranged for Jean C. Monty, a former executive of Bell Canada, to take over.

In 1993, Monti officially announced that Nortel would spend 1.2 billion US dollars on repairing software, shutting down agencies, and laying off employees. STC, which was previously acquired for US$2.6 billion, was sold to France’s Alcatel Alstom for a price of US$906 million.

This year, Northern Telecom lost 884 million U.S. dollars, and its market value fell by nearly half.

In 1995, Northern Telecom ushered in its centennial birthday. They officially changed their name to Nortel。

That is, this year, the most controversial CEO in the company’s history came on stage. he is the one– Luo Shijie (John A. Roth, also translated as John Roth)。

▲ Luo Shijie

Luo Shijie joined Nortel in 1969 as a design engineer. Later, he was promoted all the way, becoming the president of BNR in 1982. From 1993 to 1995, he was the President of Nortel North America Operations.

As a manager with an engineer background, Luo Shijie attaches great importance to the impact of research and development capabilities on the competitiveness of an enterprise. He believes that only by mastering the core technology can companies maintain rapid growth.

In order to enhance Nortel’s technical research and development capabilities, Luo Shijie first adjusted its internal organizational structure.

He substantially increased the R&D budget, increasing the proportion of R&D investment in total revenue to 15%, reaching US$1.58 billion.

At the same time, the company was reorganized into four independent business units, namely:Traditional switching business department, broadband network department, government enterprise network department, wireless network department。

These business departments serve different customer groups and can provide customers with tailor-made products.

After adjustment, the effect is obvious. From 1995 to 1997, Nortel’s revenue and profits soared, and its stock price also rose by leaps and bounds.

▲ Three-year performance changes

Soon, Luo Shijie formulated Nortel’s next development strategy, which isFully advance into the “Internet”。

At that time, Luo Shijie, who had a keen sense of smell, made a judgment. He believes that the telephone exchange business will definitely decline, and the data exchange business serving the Internet will rise in an all-round way. Therefore, Nortel can no longer hold on to traditional switches, and should invest heavily in data exchange networks to develop optical communication products with greater capacity.

In fact, Nortel had no advantage in Internet technology at that time.

In the early selection of key Internet technologies, IP technology and ATM technology have undergone fierce competition.Nortel chooses to bet on ATM。

As a result, IP defeated ATM. Nortel has not only lost a lot of investment, it has also become more passive technically.

Under such circumstances, how can Nortel bridge the technological gap and catch up with the “Internet” subway train bound for spring?

Luo Shijie thought of acquisition.

At that time, the Internet bubble was forming, technology stocks were soaring, and the entire capital market was immersed in frenzy. Nortel’s performance has improved and its stock price has soared, so there are conditions for acquiring other companies.

In 1998, Nortel completed four major mergers and acquisitions under the leadership of Luo Shijie.

Among them, the most important acquisition was the purchase of Bay Networks, a data network company, for US$9.1 billion.

In April 1999, Nortel officially changed its name to Nortel Networks(Nortel Networks Corporation, for the convenience of reading, continue to be referred to as “Nortel” hereinafter).

Leading the optical fiber revolution, reaching the top in the world

From 1999 to 2000, Nortel continued to buy and buy. During this period, their main acquisition targets were optical communication technology companies.

The fiber optic revolution that emerged in the 1990s was regarded as a rare market opportunity by Luo Shijie. As soon as he took office, he couldn’t wait to start the research and development of 10G optical communication products.

At that time, competitors, including Lucent, were generally still at the stage of 2.5G products. They believe that 2.5G is sufficient, and there will be no market for products with higher speeds for a while.

Facts have proved that the vision of competitors is too short-sighted.

At the end of the 1990s, the explosive development of the Internet greatly stimulated the bandwidth requirements of operators for data transmission products. 2.5G products are not enough at all. 10G optical communication products are king.

Nortel’s 10G SDH products soon occupied 90% of the market, almost in a monopoly position. With the success of 10G products, Nortel quickly opened the gap with Lucent and became the world’s largest communications manufacturer.

In 2000, Nortel’s revenue and stock price reached its peak, with revenue of 30.3 billion U.S. dollars and a stock price of more than 120 U.S. dollars per share. They firmly occupy 43% of the global fiber optic equipment market, almost three times that of the second-place Lucent.

The total market value of Nortel soared to US$267 billion, accounting for 37% of the total market value of the entire Toronto Exchange。

When a company gets rich, it will naturally not treat its executives and employees badly.

At that time, Nortel issued more than one billion U.S. dollars in stock options to employees, executives, and board members. For Luo Shijie, in 2000 alone, he realized stock options worth 135 million U.S. dollars.

Luo Shijie, a wealthy man, built his own mansion. In order to be quiet, he even bought the properties of neighboring neighbors. He is full of exquisite and expensive model trains in his barn. He also bought a lot of luxury cars and RVs and traveled around with his wife.

Nortel’s employees are also very happy. They care about the company’s stocks every day, calculating their worth, and thinking about how to spend their money.

Home prices in Ottawa, where Nortel’s headquarters are located, have risen by 60% a year. A large part of the “credit” comes from Nortel employees.

The bubble shattered and fell into the abyss

Out to mix, sooner or later have to repay. After 2000, Nortel soon ushered in its darkest moment.

On March 10, 2000, the US Nasdaq Composite Index reached 5048.62. Subsequently, on March 13 (the first trading day after the weekend), the stock market began to fall sharply, and the Internet bubble officially entered a period of fragmentation.

During this period, the entire technology industry, including the Internet and communications, entered a cold winter. A large number of companies went bankrupt and a large number of employees were laid off.

At this time, Nortel, because of the frantic mergers and acquisitions in the early stage, did not have enough cash flow to survive the winter. Their factory was idling, and their employees panicked. In their warehouse, there is a backlog of about 6.5 billion U.S. dollars worth of products, and no one cares about it.

Nortel’s stock price plummeted from US$120 to US$10. Nortel’s market value has plummeted from US$267 billion to more than US$10 billion.

In the second quarter of 2001, Nortel lost $19.2 billion, setting a record for a Canadian company’s quarterly loss.

At such a critical moment, Luo Shijie did not want to come forward and rescue the company.Instead, he chose to bugger。

▲ Luo Shijie

In the summer of 2000, Luo Shijie had already planned to “retire with success”. At that time, he gradually handed over the work to his chosen successor-Clarence Chandran (Clarence Chandran).

In February 2001, Luo Shijie told the board of directors that he was going to announce his resignation as CEO at the shareholders meeting two months later.

However, Chandland saw that the situation was not right at the time, so he advertised that his wounds stabbed by a robber a few years ago had not healed and refused to take over. This decision made Luo Shijie half to death. In desperation, Luo Shijie could only agree to the board of directors and continue to serve until November.

Nortel’s stock price continued to fall rapidly. In just a few months, Nortel laid off tens of thousands of employees, and the total number of employees dropped sharply to 35,000.

Housing prices in Ottawa have also fallen sharply. Everywhere on the Internet, you can see advertisements for houses for sale by Nortel employees, which read “layoff house for sale”.

On November 1, 2001, Nortel’s board of directors arranged for the former company’s chief financial officer Frank Dunn (also translated as Frank Dunn) to formally take over as CEO.

▲ Deng Fukang

The board of directors chose Deng Fukang, who has a financial background, to take over as CEO, hoping that he can control costs as soon as possible and improve his financial situation. Unexpectedly, this Deng Fukang not only failed to solve the problem seriously, but instead used the bonus brain.

At that time, Deng Fukang made a request to the board of directors-if he could lead the company out of trouble, the board of directors would give himself a bonus. The board of directors, eager to reverse the situation, quickly agreed to his request.

On January 29, 2004, Nortel released its financial report for the previous year, announcing a profit of 732 million U.S. dollars.

The board of directors was overjoyed. According to the previous agreement, 43 managers including Deng Fukang were awarded a total of 70 million U.S. dollars in bonuses (of which 7.8 million U.S. dollars went into Deng Fukang’s pockets).

Nortel’s “unexplainable” profit has aroused the suspicion of Deloitte and a director of the company. They secretly hired Wilmer&Hale law firm to review the financial report submitted by Deng Fukang.It turns out that Deng Fukang made fraud in the financial report。

On March 10, 2004, Nortel announced that it would postpone the release of audited financial data for 2003. At the same time, postponed the submission of the 2003 annual report to the US Securities and Exchange Commission (SEC).

As soon as the news came out, public opinion was in an uproar.

On March 15, Deng Fukang and related financial personnel were forced to take a vacation. On April 5th, the US Securities and Exchange Commission launched an investigation into Nortel. On April 28, Nortel officially announced the dismissal of CEO Deng Fukang, CFO Douglas Beatty (Douglas Beatty), and Chief Auditor Michael Gollogly (Michael Gollogly). (Later, the three were charged. However, they were acquitted in 2013 due to insufficient evidence.)

Nortel also announced that Bill Owens, a member of the board of directors, has officially become the new CEO.

▲ Bill Owens

Bill Owens is a former U.S. admiral who participated in the command of the Gulf War. As a soldier, his character is very strong. However, in the face of declining company performance, he could not come up with a better solution.

As a result, Nortel’s board of directors can only continue to look for a successor.

Last effort

Soon after, the Nortel board of directors finally identified a candidate who thought it was a very suitable candidate. He was the then President of Motorola-Mike Zafirovski (Mike Zafirovski).

▲ Mike Zafirovski

Mike Zafirovski was an Eastern European immigrant who was born in Yugoslavia. He has been working for General Electric Company (GE) in the United States since 1975. When he left General Electric in May 2000, he was President and CEO of GE Lighting.

After leaving GE, he joined Motorola as executive vice president and president of the personal communications department. Later, he became the CEO of Motorola. When Motorola and Huawei discussed acquisitions in 2003, the main trader was Zafirovski.

Later, in January 2004, Motorola chose Edward Zander (Edward Zander) as CEO, and Zafirovski had to resign and leave.

In October 2005, he was selected by the Nortel Board of Directors as the new CEO. In order to resolve the non-disclosure agreement lawsuit initiated by Motorola against Zafirovski, Nortel also paid Motorola US$11.5 million.

After Zafirovski’s succession, he was presented with a complete mess — fierce market competition, ruthless suppression from opponents, declining company performance, endless class action lawsuits, and The huge fines imposed by the regulatory authorities…

I have to say that Zafirovski’s style of acting is still very strong. He first spent US$2.473 billion to settle the class action lawsuit brought about by the financial scandal. Then, he carried out drastic reforms to the company’s organizational structure.

It is said that it is reform, but it is actually layoffs.

His abolition principle is relatively simple,As long as the products of this department cannot reach the top three in the world, it will be cut off。

In order to cope with the low-cost competition from competitors, he also released harsh words: “Nortel is not afraid of Huawei’s low-cost competition. We can do the cost Huawei can achieve.。”

He set Nortel’s global procurement headquarters in Hong Kong, China, and reduced production and manufacturing costs by adopting large-scale outsourcing production and ultra-low-cost procurement prices.

Zafirowski’s three-handed axe seems to be no problem. But in fact, this strongman CEO who is good at swimming and triathlon has a fatal shortcoming compared with his former predecessor Luo Shijie-that is,Lack of ability to accurately judge technology trends。

On the 3G technical route, Zafirovski bet on CDMA2000 and sold the UMTS (WCDMA) division to Alcatel for USD 360 million. Later, WCDMA won a big victory, and CDMA2000 gradually lost its momentum. Nortel missed the opportunity and could only sit back and watch its opponents get rich.

When developing 4G, Nortel, in the North American camp, followed companies such as Intel, IBM and Motorola, betting on WiMAX. As a result, WiMAX failed miserably, and Nortel’s investment was lost.

At that time, the only thing that was still helping the company to make money was the metro Ethernet and optical network business. However, a drop in the bucket cannot make up for Nortel’s investment losses in the mobile communications market.

The successive strategic mistakes caused Nortel to slip into the abyss.

At the beginning of 2008, the company was on the verge of life and death, and the decision-makers desperately laid off employees to save money.

However, when they reduced their employees’ salaries, they also engaged in an act of harassment.Give the CEO and two other executives a salary increase of more than 20%. After the salary increase, Zafirovski’s annual salary reached 10 million U.S. dollars. This action caused strong dissatisfaction inside and outside the company, and morale fell again.

In September 2008, the global financial crisis broke out, and Nortel’s financial problems were further magnified. In a critical moment, they asked the Canadian government for $1 billion in aid, but they were refused.

finally,On January 14, 2009, Nortel was unable to repay a debt of 107 million US dollars in interest, and had to apply for bankruptcy in the court, This is the end of the century-old technology giant.

After Nortel Networks went bankrupt, it attracted many competitors to buy its residual value.

After a lot of competition, Ericsson bought Nortel’s CDMA and LTE assets for US$1.13 billion, Avaya acquired the enterprise network business for US$475 million, Ciena acquired the fiber metropolitan area network department for US$521 million, and GenBand for US$182 million. Acquired the Internet telephony department. In July 2011, a consortium formed by Apple, Microsoft, Ericsson, etc., acquired 6,000 patents from Nortel at a price of US$4.5 billion.

Huawei from China also wanted to take the opportunity to acquire Nortel’s high-quality assets, but it was rejected.

Without any choice,Huawei can only miss the recruitment of Nortel’s technical personnel.These talents later became the backbone of Huawei’s 4G and 5G R&D. Including Huawei’s current wireless CTO and 5G chief expert, Dr. Tong Wen, who was the director of Nortel’s global network technology laboratory that year, and joined Huawei at that time.

After Nortel Networks went bankrupt, the lawsuits for claims by creditors continued for a long time, and the costs of lawyers and consultants worldwide even reached a staggering $1.9 billion. It was not until around 2017 that these lawsuits were gradually concluded.

Today, this once world technology giant has long been forgotten by people.