CAMPAIGNS: Nortel not guilty, crisis team proves - Crisis Communications

Client: Nortel Networks (Brampton, Ontario)

Client: Nortel Networks (Brampton, Ontario)

Client: Nortel Networks (Brampton, Ontario)



PR Team: Nortel in-house; Fleishman-Hillard (St. Louis)



Campaign: Emergency campaign to maintain stock price



Time Frame: Late afternoon, January 6 to early morning, January 7,

2000



Budget: Not Applicable





When Lucent Technologies blindsided investors on Thursday, January

6 by warning that its first-quarter earnings would fall below analysts’

expectations, Andrew Lark, VP of global communications at rival Nortel

Networks, quickly pulled himself out of a meeting.



As far as Wall Street was concerned, the two telecommunications outfits

might as well be joined at the hip. With Lucent’s warning issued just

hours before the New York Stock Exchange’s closing bell, Nortel’s stock

quickly followed Lucent’s plunge. Nortel’s market capitalization was in

real jeopardy as the stock price quickly sank from dollars 88 to dollars

77 by the time the market closed.





Strategy



Realizing after-hours trading would drag the price down even further,

Lark quickly mustered senior management. In close communication with

Nortel CEO John Roth, Lark quickly devised a plan of attack combining

the expertise of Nortel’s internal PR staffers with Fleishman-Hillard’s

pros.



’The key was to dispel the assumption that Lucent is the

telecom-equipment sector, and portray Nortel Networks as a solid

performer in its own right,’ says Tom Pagano, senior vice president at

Fleishman-Hillard.





Tactics



Nortel and Fleishman-Hillard PR pros were huddled into three squads: the

first crafting content, the second targeting print media and the last

honing in on broadcast journalists.



By early evening, a news release was issued reassuring the media and

investors that Nortel was confident in its own projections of strong

earnings.



The communications pros then spent the next four hours on e-mail and the

phone with producers, news directors, reporters and editors reinforcing

the release and providing additional background.



At around 5 o’clock the next morning, another round of calls was made,

this time with a short list of securities analysts to support the

assertion that Nortel Networks and Lucent had different customers,

strategies, technologies and growth prospects.





Results



Media coverage touted both Nortel’s confidence in its financial

projections and the company’s aggressive PR plan in the wake of the

Lucent warning - evident in such headlines as ’Nortel Shares Surge as

Rival Lucent Stumbles’ (Reuters) and ’Nortel Scrambles to Escape the

Lucent Meltdown’ (TheStreet.com/NYTimes.com).



’The most crucial part of it was the timing,’ says Kevin Max, staff

reporter for TheStreet.com/NYTimes.com. ’If they had waited until the

next day to issue the release and target the media, investors would not

have met them with the increased enthusiasm we witnessed during

after-hours trading.’



From Thursday’s close of dollars 77, Nortel’s stock rebounded overnight,

opening Friday at dollars 92 - a 19.5% gain. The upward trend continued

as Nortel’s stock closed at dollars 100.50 on Monday, January 10 - a

30.5% gain from the Thursday close, amounting to a market cap ’save’ of

dollars 31.96 billion.





Future



Nortel actually began its media outreach months earlier with story

pitches, announcements, executive visits and other tactics.



The Lucent debacle provided a measuring stick to gauge how effective

Nortel had been in divorcing its reputation from Lucent.



Though Nortel emerged stronger, the crisis exposed several holes in the

company’s communications processes, Lark says. ’We were lucky a lot of

things came together that I’m not sure will next time. Luckily, our CFO,

legal counsel and I were all in the headquarters, with the CEO in close

communication. We are now looking at ensuring synergy in the event of a

crisis, as well as reviewing news tracking and other information

systems.’



Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in