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Ethics Violation in Accounting: Nortel Networks CorporationAtlanta Metropolitan CollegeAccounting Principles I
Ethics Violation in Accounting: Nortel NetworksThe beginning of Nortel Networks began somewhere around the early 1880’s and waspreceded in business by a company named Bell Telephone Company which was approximately 4years after the telephone was invented.Nortel’s headquarters is in Mississauga, Canada.Nortel Networks Corporation is often simply referred to as Nortel and is characterized as amultinational telecommunications equipment manufacturer.This company was formally knownas Northern Electric Company.During the 1930’s, while operating as Northern Electric, itcreated an electronics division. In the 1960’s Northern Electric began supplying switching gearsoverseas. In 1996 the company changed its name to Northern Telecom Limited. In 1999 thecompany changed its name again from Northern Telecom to Nortel Networks emphasizing itsshift toward data and multimedia networking from telecommunications. This move changed thecompany from a regular company that sold telephone equipment and systems to a fast-movinginternet supplier.That same year Nortel acquired a company that manages products for Internetservice providers. It also continued to beef up its business offerings by acquiring a business thatwould offer high-margin business software and services.In the year 2000, Nortel Networks was at its peak and characterized as a giantcorporation.Nortel’s capitalized the market in excess of $350 billion Canadian dollars.Itaccounted for more than 37 percent of the Toronto Stock Exchange Composite Index value andranked very high among the largest firms in the world. Nortel’s share price more than tripled infour years. Nortel began to build up its purchasing pace in 2000 to fiber optics and softwareholdings. The company bought three optical equipment startups. They also purchased acommunication service activation software maker. Among the large list of purchases is a web
switch making company and an internet access equipment making company.Nortel had reacheda peak of more than $200 Canadian dollars per share. Its expertise was in wireless and broadbandcommunications and this allowed it to post very impressive revenue gains.Because of thisNortel tripled its sales and multiplied its pro forma operating profits several fold between the fiveyears of 1996 and 2000.In 2001 the company announced and then postponed plans to take its fiber-opticcomponents business public. This caused and economic downturn in 2001 so, the company laidoff 30,000 employees.After all of this they named Frank Dunn the CEO of the company.In thissame year Norton laid off 20,000 more employees and sold its Clarify customer service softwarefor only 200 million dollars that was originally purchased for $2.1 billion.

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Term
Summer
Professor
BridgettJ.Bell
Tags
Accounting, Bell System, Bell Canada, Avaya, Nortel Networks Corporation, John Roth

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