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Nortel Agrees To US$2.5 Billion Settlement |
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Written by Adam Gosling
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Tuesday, 23 January 2007 |
In the Class
Action suit arising out of Nortel Network's accounting scandals back in
the first half of this decade, the company has moved closer to a
resolution with the approval of an estimated US$2.5 billion settlement.
Approved by Justice Winkler
of the Ontario Superior Court, the settlement resolves seven lawsuits
in which the company was accused of misleading investors after it was
revealed to have misstated financial results.
To appease those
shareholders and avoid protracted court proceedings, the Canadian
company will pay them US$575 million in cash and issue them with common
shares worth 14.5% of the firm's
current equity. That equates to approximately US$1.7 billion based on
the current share price. The company's insurers will also kick in
US$228.5 million toward the settlement.
News the networking vendor
is on the verge of finally settling this distracting litigation comes
as Nortel continues to work diligently to get its internal structure
and product road map in order so that it can begin rebuilding.
The company's new management team, led by CEO and President Mike
Zafirovski, is restructuring the company internally while on the
product side, it continues to delineate a strategy built around next
generation technologies going forward.
Nortel is betting heavily
on IP Multimedia Subsystems, and Unified Communications as a future
part of its product mix and two weeks ago started to put some flesh to
the collaborative venture it announced with Microsoft back in the
middle of 2006.
Microsoft and Nortel unveiled the first fruits of
their alliance announcing they had formed the "Innovative
Communications Alliance" to speed up the transition to VOIP and unified
communications.
Three new solutions were announced, including an
integrated branch office appliance that brings together VOIP and
unified communications into one device.
The two also promised to provide native SIP interoperability between Nortel's
Communication Server 1000 and Microsoft Exchange Server 2007 before
mid-year and finally a new conferencing solution to "extend the rich
feature set of Nortel Multimedia Conferencing to Microsoft Office
Communicator 2007" which will provide a "familiar client experience"
across voice, IM, presence, audio- and videoconferencing.
In
2007, the companies also plan to extend their current unified
communications solution - a unified desktop and soft phone for VoIP,
e-mail, instant messaging and presence - to the Nortel Communication
Server 2100, a carrier-grade enterprise telephony product supporting up
to 200,000 users on a single system.
"We
are executing forcefully on the vision of this alliance and have made
tremendous progress," Nortel CEO and President Mike Zafirovski. "We
completed the planning stages and are now delivering unified
communications solutions to businesses around the world.
"Our goal is to close the gap between the devices we use to communicate
and the business applications we use to run our businesses, giving
employees the power to use information more quickly and effectively."
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