Nortel: Is it Time for a Change At the Top?

by: Mark Evans October 05, 2008 | about stocks: NT    
Mark Evans

Mark Evans

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Mike Zafirovski has now been Nortel’s (NT) CEO for three years.

Since his heralded hiring, Nortel has dealt with its accounting scandal, resolved multi-billion class-action lawsuits, slashed operating expenses by eliminating thousands of employees and moving operations to low-cost markets such as Mexico, China and Turkey, sold the UMTS business to Alcatel (ALU), and overhauled its senior management team.

At the same time, Nortel shares have dropped by 95%, sales have stalled, profits have proven elusive, and there’s been a lack of bold, strategic acquisitions.

And now, Nortel seems to be in strategic flux as it plans to sell its fast-growing, but barely profitable, Metro Ethernet network business, and focus on becoming an enterprise player with a service and software bent.

In a nutshell, Nortel continues to struggle to find its way.

At some point, the question has to be asked is whether it’s time for the board to consider whether a new CEO is needed to give Nortel a chance of thriving/surviving?

It’s not to suggest that Zafirovski hasn’t done yeoman’s work over the past three years given he came into a dysfunctional company doing business in a ultra-competitive market.

But is Mike Z. the right man for the job right now? If Nortel needs a dynamic new direction - or, at least, a new direction - would it be better/make a difference if a new CEO was hired to make it happen?

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This article has 9 comments:

  •  
    Oct 05 09:59 PM
    Yes, it is time for Mike Z to move on. Nortel has gone from bad to worse. It was once a fine company and has been destroyed by inept management (and some that was corrupt). Mike Z came from Motorola and a culture that is much different from what Nortel culture was. At this point Nortel is so decimated, it is questionable whether it has any culture. They need some of the old timers who know that culture and who have integrity and business sense. Nortel hasn't had that combination in years.
    Reply | Link to Comment
  •  
    Oct 06 08:09 AM
    Better yet, someone should come around and BUY this former Canadian "gem" from its misery!
    Reply | Link to Comment
  •  
    Oct 06 09:25 PM
    Mike Zero is grossly overpaid ($10Mil), so he probably has a very generous parachute. He could not change a corporate culture that was bureaucratic. This company was run for the benefit of employees not shareholders. Now management wants to sell assets and use the proceeds to pay for severances....what a surprise
    Reply | Link to Comment
  •  
    Oct 07 06:45 PM
    Poor Nortel, it never recovered from the tech bubble-burst and it has let go of most of the legacy talent that made the company great. Nortel has become a sweat-shop of process, and lacks the support of products that made it profitable. Suffering from a stream of management decisions without accountability, the worker bees get the shaft and the senior management get the bonuses. Bell Northern Research has become the bell weather of dysfunctuality...
    Reply | Link to Comment
  •  
    Oct 07 06:55 PM
    I believe the demise of Northern Telecom was when it was taken over by Bay Networks. Until that merger disaster it was a terrific place to work, but, today it is the worst place to work. Why would anyone invest in a company where its employees are so un-happy, they hope for a lay-off package? All you have to do is compare the insider transactions to see management getting their fat bonuses. While the employees get little more than stress-related mental break-downs for being over worked while their saleries loose ground to cost of living as they work from round to round of lay-offs.

    If anything, Nortel should be the key business school example of how to ruin a company and demoralize employees...
    Reply | Link to Comment
  •  
    Oct 07 07:05 PM
    The real un-told story of Nortel is the employees, past, present and future. Everyone is so fixated on the management. I wonder how many Americans realize that Canadian Nortel employees are forced to invest a significant portion of their company retirement in Nortel stock?

    How hard it must be for Canadian Nortel employees to stomach working for the company that is not only failing their career, but, failing their retirement as well.

    Not like an Enron that was a quick death, this is a slow agonizing cerbal hemorage on a monumental proportion for the average Canadian employee.

    Do you think we could think about ythe employee for a change...?
    Reply | Link to Comment
  •  
    Oct 09 04:22 PM
    As an Ex Motorolan, I had major hopes for Mike Zafirovski. Looks like Mike has jumped on the gravy train like all the others in both Nortel and Motorola. Is there any talented individuals out there that know how to run a company and make money?
    Reply | Link to Comment
  •  
    Oct 25 05:51 PM
    I run a company selling only Nortel porducts for the last 15 years, with year over year growth in revenue and profits. I think Mike Z walked into a mess thats hard to turn aorund, however i think it CAN be done by perhaps persuing a different corporate structure with maybe 10 to 15k emloyees ( dont mean to sound cavalier about peoples lives but its reality) focusing on a significantly downsized portfolio of products and a more tartgeted geographic area of operations (not in 150 countires) with revenues in the 4 to 6 $b range basically getting the people and products nimble again, a'la Shortel Mitle etc.

    P.S. make Business Made Simple a reality not a slogan
    Reply | Link to Comment
  •  
    Nov 05 07:41 AM
    Nortel bought Bay, not the other way around. And Nortel's bureaucratic style culture now dominates not Bay's. I know because I lived through it all. We went from a customer focused, productive environment to a process driven, multi-layered bureaucracy, where the common sentiment is to "hide" from the customer.


    On Oct 07 06:55 PM Empathy wrote:

    > I believe the demise of Northern Telecom was when it was taken over
    > by Bay Networks. Until that merger disaster it was a terrific place
    > to work, but, today it is the worst place to work. Why would anyone
    > invest in a company where its employees are so un-happy, they hope
    > for a lay-off package? All you have to do is compare the insider
    > transactions to see management getting their fat bonuses. While the
    > employees get little more than stress-related mental break-downs
    > for being over worked while their saleries loose ground to cost of
    > living as they work from round to round of lay-offs.
    >
    > If anything, Nortel should be the key business school example of
    > how to ruin a company and demoralize employees...
    Reply | Link to Comment
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