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      • « Nortel: Dead Man Walking? | Main | Nortel’s Market Cap Sinks Below $1-billion »

      A Change at the Top?

      By Mark Evans | October 3, 2008

      Mike Zafirovski has now been Nortel’s 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, 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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      Topics: Executive Suite |

      Viewing 14 Comments

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        For the life of me I have a hard time understanding why numerous posters here actually want to see Nortel bankrupt and destroyed.

        For the life of me I don't know why you haven't created a more objective Nortel site with screen shots of your daily NT stock purchases made via e-trade, or so.

        Cuz that would be more "objective" by your definition.
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        puddinetane,

        Full disclosure: I have never owned NT shares.

        cheers, Mark
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        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?
        ======
        re
        Mike Z has an excellent pretext for leaving Nortel. I’ll just remind it. He was fooled into believing that accounting restatement were over. It was not so as we remember. It derailed his plans as I remember him talking about that /new restatements in 2006/.
        Chosing GE way of business model for Nortel did not work either.
        What about bringing back CSCO twins? Gary&Gary
        BofD thought that CSCO twins' plan was good but too early. Owens liked the Plan too but disagreed on execution and style.
        Now that Owens is gone and Mike Z does not know what to do CSCO twins would just make some corrections and speed up their Plan. They know Nortel from inside,.
        They would not waste much time to start from scratch.
        If it's not too late as many posters expressed their view on that subject here, bringing change to the management team would bring some confidence to the customers or just stop the customers exodus.
        There was something sparkly in twins! imho
        They showed courage and integrity!
        Nortel needs a healer or a priest! In Gary D it would find both! /pam intended/
        My best wishes to hard working and honest Nortel's employees_engineers. I am so sorry for your current situation caused by accounting scandals.
        anyway if Nortel can not be fixed I wish you find good or better jobs in those companies which are doing well.
        There is always a silver lining!
        Btw
        Mark Evans
        Your poll
        Does Nortel Need a New CEO?
        Shows only 10% support for Mike Z as CEO!
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        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.



        You haven't been listening closely or reading Mark. The software and services market is growing much faster than traditional telecom, which is quickly becoming a commodity. Software is also not as capital intensive a business as being a large equipment supplier. Finally, processing power in hardware is increasing faster than the blink of an eye relative to the applications that can use it. There are actually many many grid and network-based applications that have yet to be written up because of a lack of cross-functional & vertical knowledge at any one single company. Nortel would be better off going private and retooling the company.
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        From all appearances the natives are getting restless....

        MZ or the rest of the executive team would not have been able to avoid this. 1930's style collapse no one can forsee. This not the failure of the CEO. He's only as good as the people he has. Admittedly, he brought in many hacks. And many of the good people left or where forced out because of them. Loyalty counts, and in troubled water, I'd rather have people I can depend on, even if they may not be the "best" for a role.

        So onto the real problem....

        I fondly recall a meeting where one of the VP's was reminiscing about seeing other BNR VP's in other parts of the company in a meeting he just attended, even after 60,000 layoffs (this was 2003). Clearly the issue is middle management. The lower-rung employees love that place (it's why they stay and tolerate blogs and negativity). Sr. Management pushes for change with 6-Sigma and other efforts. However, Middle management, the directors and low level VP's have remained the same.

        So, tell me how can the company change it's culture, when there is a 1980's layer in there doing a CYA. That layer, truly 100% believes in the BNR and pre-2001 Nortel. They have that mindset, and refuse to see anything else. So, no matter who is at the top, or who is at the bottom, the ship can't right itself.

        This is analogous to a government department. Sure, we vote in a Conservative or Liberal government, and the PMO and Deputy ministers change. But, does the clerk who processes your income tax form change? Does the director general who is responsible for those people change? Rarely if ever. New ministers and deputy ministers are scared to change the director generals because they have the operational knowledge of what makes his department work. That is the same of directors and lower-level VP's in Nortel. If you change them out, the whole system could break (in theory).

        The last couple weeks of the markets being in jitters has affected anyone who remotely cares about their investments. Nortel is a easy target. I find it pathetic that after all of these years, reporters still bring up Nortel had a 400Billion market cap and point out it's share price is 1% of what it used to be. It's useless and irrelevant information.

        If you want to know who's next on the Canadian media blogging hit-list... RIM. Once Nortel has had it's run, RIM will be the next target. Can we create a "AllAboutRIM" Blog and start shooting down Blackberry because the iPhone is cool?

        Face it, people love drama, and Nortel is full of it.
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        Veterans from the telecom wars and better heads called a dream team prevailed and could do nothing.
        The green team has proven even worse.

        It was already tough enough to recruit talent before this first time CEO.

        Who on earth would risk their careers now at this stage of the game?

        Maybe the evil empire can tempt another CEO to the dark side who signed a non-compete agreement on several written occasions that can boast buying opportunities and 3 to 5 years turnarounds even better!

        Enough insider only CFOs before Binning. who may know exactly what to do in light of Marconni so the best team they can muster may already be running the show.

        What CEO might play conductor now orchestrating the band as the Nortanic sinks? Not many I suspect.

        A new face? Nahhh, theya re almost done, What good is a new CEO for another month or 2 before they fold.
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        Great!

        Yet another useless CEO climbs on the Nortel horse, takes it for a ride, and collects the prise money.

        Oh well ... I still have a Northern Telecom coffee mug, still useful.
        • ^
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        It won't make the slightest difference who is at the top of Nortel.

        I really don't want to see Nortel disappear but it seems almost inevitable. It is an utterly broken organisation riddled with factions hell bent on in-fighting for political gain and management completely out of touch. Lucid decision-making is impossible as demonstrated by the endless movement of operations around the globe under the pretence of cost saving.

        It's simply amazing to watch a company that has survived over 100 years, including two World Wars, collapse in less than a decade. There are going to be a lot of casualties and you can be sure the executive team won't be among them.
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        For the life of me I have a hard time understanding why numerous posters here actually want to see Nortel bankrupt and destroyed. Do these people really want to see critical infrastructure around the globe become compromised just so they can get their hatred-laced desires satisfied? Is it because they hold a sever grudge because they were layed-off so the retaliation is to wishing for a company to be destroyed?

        It is becoming almost cult-like with this blog being the official home.
        • ^
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        TIC,

        You must be a young one. Think Nixon-time USA and you'll get it. Protests, demonstrations, senate hearings, Deep Throat, etc., ultimately leading to shameful resignations by all. None of the then-critics wanted the US to fail; all were disgusted with its leadership to a visceral boiling point. To paraphrase George Santayana as eloquently as I can, history is just repeating itself, and cleansing off its past. Darwinism, in real-time...--bb
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        Nortel is almost less than a billion in market cap. it is now $2.03. I hope it goes bankrupt so Z and his cronies get kicked out with no money. And if they do, then get investigated by the SEC and others.

        As for employees hope many are transferred to new companies acquiring assets or get their severance at the minimum.
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        Who cares? The only thing that matters is how much money he can take the shareholders for before he goes.
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        "Since his heralded hiring, Nortel has dealt with its accounting scandal...and overhauled its senior management team."

        I guess I would have pinned the resolution of the accounting scandal onto Bill Owens. Z just came in and let it play out.

        Overhauled its senior management team? When I think of the word "overhaul" I think of taking something broken and fixing it. I would not apply that term to what Z has done to Nortel's senior management. He certainly replaced them all, but it's still as broken as it ever was.

        Oh, and what's our definition of insanity? Continuing down the same path of destruction, or trying something new? Bill Owens righted the ship; Mike Z has run it into another iceberg. I say it would be insane to not replace Mike Z. Leaving him to finish the job he's begun is not helpful.
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        As much as I would like to see Mike Z treated as a bad Vaudeville show, changing him at this point would be insane. Nortel has taken a nose dive it probably won’t come out of, but making that kind of change at this point would do nothing more than drive the company into greater turmoil. Mike needs to be allowed to finish his work or make the strategic decision to sell Nortel in parts as necessary. The only stipulation that needs to be put on Mike Z by the BOD is that he recover as much of the shareholders money as possible during the liquidation of the company.
        I am no fan of Mike Z and would really like to see him feel the pain he has inflicted on shareholders, but changing the top management will not help at this point.
       
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