Nortel’s boss is calling it quits

The man who came onboard to try to save a troubled Nortel Networks and instead has helped to steer it into bankruptcy protection and through a court-supervised asset sales process is moving on. The vendor announced today that Mike Zafirovski will be leaving his post as president and CEO as the company restructures its corporate structure for the next phase of its evolution, likely as a patent licensing firm.

Zafirovski came to Nortel in 2005 from senior positions in the U.S. with several major technology companies, including Motorola and General Electric. He tried to steer the company through the aftermath of several costly accounting scandals as well as a changing technology landscape, but in the end as the economic downturn hit the industry Nortel was unable to hang-on.

In a press release today, Nortel announced that the company had reached a natural transition point with the sale of the wireless business to LM Ericsson and a stalking-horse bid for the enterprise business from Avaya. Therefore, Zafirovski will be leaving Nortel and the company’s board will shrink from nine directors to three: John A. MacNaughton, Jalynn H. Bennett and David Richardson.

“Mike made a commitment to see the process through the stabilization of the company, sale of its largest assets and the right plans and people to continue operating our business and serving customers. He has done so. I appreciate the commitment and passion he brought to this company since day one, including his guidance through the extremely difficult decisions we faced since filing for creditor protection,” said Nortel chair Harry Pearce in a statement. “Mike came to Nortel to transform this company. He made great progress on many fronts including addressing significant accounting and related legal issues; improving the quality of Nortel products and the company’s cost structure. His ambitious vision helped shift the economic center of the company from legacy to growth investments. It was unfortunate the transformation was derailed by a deteriorating economic climate and the company’s legacy cost structure. The operating improvements and strategic investments made during his tenure significantly contributed to the fact that Nortel’s businesses are so attractive to potential buyers today.”

Meanwhile, Zafirovski gave no indication of his future plans in his statement, instead expressing his pride for the Nortel team.

“The Board members and I came to Nortel because we really believed in the value of Nortel’s people and technology. Although solid progress was made in many areas, at the end, the capital structure and legacy costs coupled with the economic downturn proved too difficult to surmount,” said Zafirovski. “I have tremendous respect for the Board of this company and the process we went through to initially transform the company, and since filing, to work to maximize the value of our businesses while preserving employment and customer commitments to the greatest extent possible.”

As part of the restructuring, the company’s business units – Wireless Networks, Enterprise Solutions, Metro Ethernet Networks, Carrier VoIP and Application Solutions and the LG-Nortel joint venture – will report to the Chief Restructuring Officer, Pavi Binning. The mergers & acquisitions teams will continue to report to Chief Strategy Officer, George Riedel. Nortel Business Services under Joe Flanagan will continue to service Nortel customers as the businesses transition to new ownership. And a core corporate group will be established to manage the day-to-day restructuring and post-sales activities, reporting to former Nortel treasurer John Doolittle.

Finally, Nortel just reported second quarter results today. Revenue of $1.972 billion was down 25 per cent from a year ago, but up 14 per cent sequentially. The company posted a net loss of $274 million, more than twice the net loss of $113 million from a year ago.

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Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.

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