Corporate Overview Of Nortel Networks Corporation

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Corporate Overview Nortel Networks Corporation, formerly known as Northern Telecom Limited, was a corporation type business. Nortel was a multinational telecommunications and networking equipment manufacturer, producing products such as, Ethernet adapters, routers, space satellites, phones and more networking hardware. Nortel was founded in 1895, Montreal Quebec and made base in Mississauga Ontario until bankruptcy. Nortel’s beginning name was at first Northern Electric Manufacturing and Supply, producing many of Alexander Bell’s stellar telephones such as the Contempra in 1968. Nortel, between 1999 and 2000 reached their peak net worth of 300 billion dollars. At that time they employed around 94,000 workers worldwide, including the U.K.,…show more content…
During the time of falsifying balance sheets and income statements, the managers were the ones that received the majority of the bonuses, 12.8 million dollars each. Basically, the liabilities were placed as revenues because at this time, Nortel’s stock was plummeting, leaving the manager’s hopeless. Manipulating the financial statements, overstating revenues triggered the extra bonuses for the Dunn, Gollogy and Beatty. A key example includes at one point, Nortel had 189 million dollars of liabilities, but only showed 80 million dollars of liabilities, converting the rest to revenues. During the same time period of the scandal, the business’s stock was still decreasing in value as each year passed. While stocks were decreasing in price, Nortel’s false profitability, made it seem as if they were still a profitable business, but simply was not. When the three main managers were trialed, the external auditors, Touche and Deloitte, were fired for not providing accurate financial statements and holding them back from the accounting firm during the period of the scandal. The second scandal, includes Nortel using bill and hold transactions. When a product is sold, the revenue that is earned cannot be recorded, unless the customer gives the seller permission to, which would be a bill and hold transaction. Nortel, having other plans, did the bill and hold transaction continuously by their own will. Overall, the accounts affected are liabilities and revenue. For the

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