In a much-speculated move, Nortel is selling its corporate HQ
in suburban Toronto to Rogers for C$100-million. You wonder if
this will change where new CEO Mike Zafirovski will live given he said
he planned to move to Toronto next summer – that is if Motorola and
Mike Z. can work out a deal over that troublesome two-year non-compete
clause Mike Z. signed in January in return for a $16.8-million
severance package. In one sense, Nortel dumping its headquarters is
another sad chapter in the company's death by a thousand cuts. The 1M
square foot facilty used to be a switch manufacturing plant before
Nortel spent $46-million to renovate it in the mid-1990s. In its
heyday, it was a corporate crown jewel
with restaurants, a bank, fitness facility, a Zen garden stone with
benches and a Japanese maple tree, and a serenity loft (apparently,
people were working 7/24 at the height of the telecom boom so they
needed all kinds of amenities). In recent years, however, the
headquarters has lost its relevance/importance north of the
border to Nortel's R&D facilities
in Ottawa, as well as U.S. operations in Raleigh, N.C. and Richardson,
Tex. On the other hand, having a
headquarters literally in the middle of nowhere only 30 minutes from downtown Toronto and a short drive from the airport that isn't close to
customers or R&D facilities, makes little sense is not that bad, I guess. I wonder how
Rogers' employees will feel about moving to Brampton, particularly
those who used to work before Call-Net before it was acquired by Rogers
earlier this year. If they are the ones moving to Brampton, it could
make a very long commute.
Update: Here's the story I wrote in the National Post
on the sale of the HQ, looking at how it symbolizes Rogers'
transformation into a telecom player from its roots in the cable
industry.
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6 Comments
Speculation? Hey, I prefer to call it hard facts… hee hee.
ty
“On the other hand, having a headquarters literally in the middle of nowhere…”
Have you been to Brampton? It is a city of over 400,000 people, well within the commuter shed of Toronto and within a 15 to 20 minute drive to Pearson International airport. Access to and from downtown Toronto is via the 400 series of highways (the Nortel building is roughly 10 minutes from the intersection of 410 and 407) or via a GO transit line that has a station 5 minutes from the Nortel complex.
This is hardly in the middle of nowhere as companies such as Loblaws, Coca Cola, Chrysler could tell you as they and many others have chosen to locate there.
For the last several years, Brampton has been battling with Calgary and Toronto as the country's leaders in new building permit value.
How will the Rogers employees feel? Well those of them that do not already live in Brampton will probably have to figure out a new way to get to work…..other than that, I expect they will be fine with it!
man, i wish we had a serenity loft
Good article.
What I am wondering is what, if any, impact this has on the commercial real estate market. We have only just started to see new office buildings planned (Wellington and Simcoe as an example) and I have to wonder if a 1 milllion s.f. tenant has now decided to buy and relocate to Brampton….do we really have the tenants to, both, replace that tenant and fill the new buildings!
Nortel sold manufacturing they are having trouble getting paid for as we keep hearing next, year, next year… only partial payment at that… and now we learn they don't want it all either.
Announcing cutting almost 70% of R&D (20 of 30 centers according to Owens) right after losing the $19 billion British telecom (BT) tender doesn't look good for the future. They attributed poor wireless performance due to Cingular loss, I wonder what impact BT will have. BSNL is a lost leader too tendering 5 times their initial money losing order to lower priced competitors like Huawei.
They arn't the most transparent equity in the marklets but we have yet to hear about the savings from the severences ending last June. They still seem to have no plan announced a year later and with Garys leaving I hardly think a passed by disgruntled CEO who lied in a contract has any magic pill to save them intheir esculating struggle with losing ventures.
The closing of headquarters was anticipated, expected, and the stock reaction indicated the market was in denial or has poor retention. This should not have come as a shock, it was expected, look what elese they cut… everything (death spiral)
How will it react if criminal charges are announced, debt must be paid from rapidly declining cash when no one refinances losing operations, unreliable numbers, negative outlook, huge fines, billions in settlement for the fraud class action currently being amalgamated in the U.S., etc… These are all events we anticipate, like the selling of HQ, let alone the multiply more suprises we do not like Owens, Collins, Garys, Deroma leaving or Mike getting sued.
This market with a horrible process of recall may take this stock for another ride yet in light of this and eventually even shake out even those tenaciously holding since the fraud of 47X bogus P/E to make even lower lows and provide a less than enticing compensation for Mikey Z, if he ever really does start.
Too many ambiguities paired with ongoing bad news there. The Chief legal officer suddenly retiring before NT's largest lawsuit makes as much sense as paying bonuses on 2005 which earned even less than 2004 to date… this Q205 gain if 2 cents per share seems out of whack even if they did increase revenues by asset sales, paying customers more to take their product with falling margins, and old receivables coming in. I wonder if this is why people are leaving… lights on but no one's home… who will be the last one to turn off the lights now… the trustee or Mike Z., if he ever really does start that is.
Well here is the point of view of a Roger Employee. This building is dark with lots of ugly colours. The drive is great if you live next door. Most of us here 95% at One Mount Pleasant live in other locations and everyone is looking for new jobs to deparments that are not moving. The facilities are the same here. We are moving 5,000 person to Brampton in the next two years with parking for 2500 cars… so now who gets parking. Now lets look at the locations Yonge & Bloor is five minutes away vs Brampton Centre.