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Why Nortel Went Bankrupt
Nortel, a Canadian telephone equipment maker, filed for bankruptcy protection in January 2009 due to structural issues exacerbated by the financial crisis. While recessions impact companies with pre-existing problems, the primary cause of Nortel's bankruptcy was its inability to keep up with the rapid pace of digital technology development. Moore's Law, which observed that digital capabilities double every 18 months, created a relentless cycle of innovation that Nortel could not sustain. Despite early investments in digital technology, Nortel failed to integrate acquisitions and transform its business model to adapt to the digital shift in the industry. As competitors continued advancing technology, Nortel was left behind, leading to bankruptcy.
