Zafirovski’s departure sounds death knell for Nortel

Nortel Networks Corporation announced a number of leadership changes and a new organisational structure designed to work towards the completion of the sales of the company’s businesses and other restructuring activities with a continued focus on maximising value while preserving Nortel’s innovative technology platforms and employment to the greatest extent possible.

Effective August 10, 2009, Nortel president and CEO Mike Zafirovski stepped down. Also effective on that date, the boards of directors of NNC and Nortel Networks Limited (NNL) reduced from nine to three members: John A. MacNaughton, Jalynn H. Bennett and David Richardson, with Richardson serving as chairperson. These individuals will also serve as members of NNC’s and NNL’s audit committees.

Zafirovski claims Nortel had been making progress, but was negatively affected by the adverse global economic climate

“We’ve reached a logical departure point,” said Harry Pearce, chairman of Nortel’s board of directors. “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. 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.”

Zafirovski commented: “I am extremely proud to have been associated with this company. 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. 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 maximise the value of our businesses while preserving employment and customer commitments to the greatest extent possible.”

Concurrent with the aforementioned announcement, Nortel established a structure that will enable the company to effectively continue to serve its customers, and also facilitate the sales of its businesses and integration processes with acquiring companies as well as to continue with its restructuring activities.

• 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 company’s mergers and acquisitions teams will continue their work under the chief strategy officer, George Riedel.
• Nortel Business Services (NBS) will continue to serve the transitional operations needs of Nortel businesses as they are sold to ensure customer and network service levels are maintained throughout the sale and integration processes. NBS will continue to be led by Joe Flanagan.
• A core corporate group is being established that will be primarily responsible for the management of ongoing restructuring activities during the sales process as well as post business dispositions. This group will be led by John Doolittle, formerly Nortel’s treasurer.