Nortel CEO and Board Go to the Exits

Nortel in the midst of bankruptcy saw its CEO, Mike Zafirovski and a large portion of the entire board announced their resignations today. Back in November of 2008 I thought Zafirovski was on his way out. He has survived much longer than I anticipated. According to a story in today’s Canada Globe and Mail Report on Business,

“The direction has been set and we are now at a natural transition point as we continue to service customers, maximize value through sales and continue restructuring activities,” Mr. Zafirovski said in a news release.

“We’ve reached a logical departure point,” added Harry Pearce, the chairman of the board, who is stepping down along with five other directors: John Manley, James Hunt, Richard McCormick, Claude Mongeau, and Mr. Zafirovski.

It is sad what has happened to the once thriving telecom equipment firm. Keep an eye on how this all plays out.

For more:

New York Times

Newsvine

BizJournal

Ottawa Biz Journal

CEO Watch - Mike Zafirovski, Nortel Networks

Nortel Networks NT (NYSE) , the struggling telecommunications equipment manufacturer just announced another round of employee layoffs.  According to Howard Solomon of Network World Canada,

(The company) will lay off another 1,300 employees and restructure its business to face an accelerated “sense of emergency” in worldwide plunge in customer spending. 

… Zafirovski said that starting Jan. 1, Nortel’s four divisions will be trimmed to three: Units that will create and sell carrier network products, metro Ethernet network products and enterprise products. The global services division that had existed will be split among the remaining three so each unit will be vertically integrated.

One of the more illuminating aspects of the cuts, which according to many analysts is too small and too late, is the fact that four key executives will be leaving.  Most of them came in under Zafirovski who had been hired back in 2005 to deal with the company’s troubles.  Nortel will see the departure of Lauren Flaherty, chief marketing officer, John Roese, chief technology officer, Dietmar Wendt, the global services president and Bill Nelson, the executive vice president for sales.   According to a story by Amy Thomson and Vivek Shankar of Bloomberg these four executives will depart as the,

Nortel has lost more than $4.5 billion since Chief Executive Officer Mike Zafirovski took over in 2005, pushing him to cut 18 percent of the workforce. Phone companies such as Sprint Nextel Corp. have curbed network upgrades to cope with subscriber defections. Others are shifting from Nortel’s older technology, seeking faster products from Cisco Systems Inc. and rivals. 

 What’s even more troublesome is the fact according to Lilly Peel of the Times Online,

Nortel Networks Corp reported it biggest loss in seven years… 

It is difficult to see how Zafirovski will have the ability and the confidence of shareholders to permit him to continue much longer in his efforts to try and turn the company around.   Nortel like Alcatel-Lucent and many other telecom equipment manufacturers are fighting an uphill battle.  There is nothing about Zafirovski’s plans or previous actions that can instill confidence that he has what is necessary to keep the Nortel ship afloat as it continues to move through troubled waters. Stay tuned.  

For more:  

The Globe and Mail  

Seeking Alpha 

theStar.com

Financial Post