Nortel confirms CEO exit as losses widen - Mobile World Live

Nortel confirms CEO exit as losses widen

20 OCT 2009

The expected departure of Nortel Networks’ CEO Mike Zafirovski was confirmed yesterday, as the troubled Canadian vendor unveiled a management restructuring amid widened quarterly losses. Commenting on Zafirovski’s immediate move, Harry Pearce, chairman of Nortel’s board of directors, said both parties had “reached a logical departure point… Mike made a commitment to see the process through the stabilisation 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.” Zafirovski took the helm in 2005, charged with turning the company around after a major accounting scandal. In January this year Nortel entered bankruptcy protection. Meanwhile, the company yesterday announced a new organisational structure that will have all of its business units – Wireless Networks, Enterprise Solutions, Metro Ethernet Networks, Carrier VoIP and Application Solutions, and the LG-Nortel joint venture – reporting to chief restructuring officer Pavi Binning. “There is still much work to be done,” noted David Richardson, Nortel’s chairman elect, in a statement. “I believe we have the right team and the right structure in place to ensure continuity in our efforts to maximise the value of the businesses, while preserving Nortel’s innovative technology platforms and employment to the greatest extent possible.”

Separately, Nortel announced a 25 percent year-on-year fall in second-quarter revenue, coming in at US$1.97 billion (although this was a 14 percent increase on the previous quarter). The company reported a net loss of US$274 million, compared to a net loss of US$113 million in the year-ago period. Cash balance at the end of 2Q09 was US$2.56 billion, up from US$2.48 billion at the end of the first quarter. “While we continue to be impacted by the economic environment and the Creditor Protection Proceedings, we have successfully stabilised the business since filing for creditor protection,” claimed outgoing CEO Zafirovski. He added yesterday that he is confident Nortel will get bids for all of the company’s parts by the end of September.

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