Nortel CEO to step down, quarterly loss widens

Mon Aug 10, 2009 1:00pm EDT
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By Wojtek Dabrowski

TORONTO (Reuters) - Nortel Networks said on Monday its chief executive will step down immediately and its board will shrink from nine directors to three as the bankrupt telecom equipment maker works to sell off all of its major assets.

Nortel expects to get bids setting minimum prices for all of its divisions by the end of September, moving it closer to completing its own dismantling, CEO Mike Zafirovski told Reuters.

"Discussions are advancing. They're promising and there's a confidence that we should be able to get 'stalking-horse' agreements for all parts of the business ... before this quarter's over," said Zafirovski, a former Motorola executive recruited in late 2005 to arrest the Toronto-based company's steady decline since its tech-boom heyday.

Nortel, once North America's biggest maker of telephone gear, also said its quarterly loss ballooned from a year earlier due to big reorganization costs and plunging sales, which it blamed on the weak economy.

Zafirovski's departure seemed inevitable after the once high-flying technology company filed for court protection from creditors at the start of this year.

"There is very little for Mike to do -- for any CEO to do -- at Nortel at this time in terms of strategy or operations or even cost-cutting or sales," said Duncan Stewart, analyst at DSAM Consulting in Toronto.

"This is a company that is being wound down with assets being sold off."

The three remaining directors are John MacNaughton, Jalynn Bennett, and David Richardson, who will serve as chairman, Toronto-based Nortel said.   Continued...

<p>Nortel President and Chief Executive Officer Mike Zafirovski (R) waits for the start of the company's annual general meeting with Chairman of the Board Harry Pearce in Ottawa May 7, 2008. REUTERS/Chris Wattie</p>