The Four Horsemen of the Apocalypse

I still think Roth was the shrewdest. He had Dunn under him working the necessary financial magic, most certainly knew hat he was up to, and what he would do if offered and given the keys to the candy store.

As the house of cards began collapsing Roth traded said keys for a decent amount of cash and let the kids loose, his poker face ever fighting the persistant impulse to burst forth in a gleeful smirk.

Analysts said Friday that the management shuffle is a healthy move for the company, and the way it was announced -- without a named successor for Roth -- indicates that the company is looking for external candidates.

"The fact that they have not announced a successor implies to me that they want to do an outside search, and that is actually probably healthy,' said Alex Henderson, an analyst at Salomon Smith Barney.

Erstwhile candidate Clarence knew too much, took the unsubtle hints not to interfere, and ultimatley bowed out:

Chandran, 52, once seen as Roth's heir apparent, has been on medical leave since March 13 for what was supposed to be a six-to 12-month recuperation period to allow him to recover from a 1997 stabbing attack in Singapore.



Lynton Wilson, chairman of the Nortel board said: "Speaking on behalf of the board of directors, we're extremely pleased that after an extensive search internally and externally, we are able to announce Frank Dunn as John Roth's successor.
"During our search for a new president and CEO, we interviewed a number of outstanding candidates from across the industry in Canada, the U.S. and internationally. As we progressed through the search, it became clear the industry was going through a deep and protracted correction. The company required the management skills, industry experience, and business credentials that Frank Dunn has demonstrated. He has played a leading role putting in place a business structure that ensures the company will be both sustainable and profitable in an industry that has gone through an abrupt and severe correction."
Wilson said the board of directors "is especially pleased that John Roth agreed, at the board's request, to remain with the company as vice-chairman and a member of the Office of CEO.

Lacking savvy, I spoke too soon:

Hackney said that as soon as the bankruptcy filings were announced, he called the CIOs at Nortel's five largest customers to explain the move. "They're savvy, and they get it," he said.

IT managers who might consider switching to rival vendors should look at why they chose Nortel in the first place, Hackney added. "I'm absolutely convinced that our value proposition only gets stronger with the financial protections," he said.

Firmly believe, be absolutely convinced that only Ch 11 companies offer the bestest with the mostest.

This shows Hackney is clueless. Our company has stopped buying Nortel products and is trying to find out how we can ditch our current Nortel products before they go T-U.

They are savvy enough to ensure Hackney thinks they 'get it''. These are the 'World-Classers" Z boasted about? Wow; got some Macedonian swamp land I need to get reed off. Pls call 1.866.IDIOTSS...-bb

More doublespeak from the management team that is working hard to perfect this craft everyday!

Suddenly, Ch. 11 is a "value proposition" for customers! Who would have thought!

Hackney proves again that the only phrase he can use is "I'm absolutely convinced", and it usually used as a qualifier for things that are demonstrably false!

I can just hear Hackney chatting w/Z: “Yeah boss, after we file for Ch. 11 we’ll have our customers exactly where we want them.” Wish I could get SNL or South Park to do sketch on that yoyo…--bb

Haha! Then the Nortel jet they're on cuts ahead of a Cisco jet on the tarmac. Hackney disembarks, swaggers onboard the latter, and asks the flight attendant if everything was OK and if she had a problem.

"He then grabbed the left side of my face. I told him not to touch me," she said, and Hackney responded that he'd do what he wanted.

As a (potential) customer how can I be certain that I get what I paid for, on time, at no extra cost, and with the customary support from this current version of Nortel?
The BoD has perpetually toggled, slashed, manipulated, tweaked, adjusted, redefined, tinkered with, reduced, and outsourced virtually everything and everyone below it, all to no avail.

As an employee how can I be certain about anything I'm told?

An easy way to determine the truth, that is fairly accurate, is to take whatever is said by upper management, and then define the polar opposite of it.

It may not work 100% of the time, but it'll be a good start.

DJ,

In the case of NT it does work 100% of the time, I assure you...--bb

It is quite amazing at how many insightful contributions have been made by readers of Mark's blog of which many are former and current employees.While it is sad to see Nortel fall as low as it has,I believe that alot of the company could be salvaged and as many here have suggested,there needs to be a change of leadership including the BOD.

In my opinion the best thing that could happen is that Nortel's creditors(Mellon Bank) negotiate to the courts to arrange an external telecom consulting group to assess Nortel's businesses and determine the best way to procede with chapter 11 restructuring so that there would be as little impact as possible to current employees and ultimately to their pensions and severances.

A chapter 7 scenario is not what Nortel's creditors want especially in this current economy,this would really lowball liquidating assets and leave many employees stranded without any financial security.

In fact I would urge all employees to be as proactive as possible with management and various legal bodies that are involved in the current restructuring.

Sadly it has become quite apparent to many that the current leadership has not been able to direct Nortel through this economic slowdown,while management has stated that the economy has been the reason for their filing chapter 11,in retrospect we can see that there have been many wrong decisions made by current leadership including the BOD for their inability as a group to foresee the troubles that Nortel is now in.

Actually in looking back to when MZ had signed on to become CEO,I believe that it wasn't Nortel's first choice,but that the then BOD were in need of someone who was thought to have at least some experience in the industry and with MZ having played a part in the success of Motorola's RAZR,he was an acceptable compromise for Nortel at the time and would be a better fit than the emergency apppointment of Bill Owens in light of the accounting mess.

With this being my opinion, I feel that many potential CEO candidates that may have been approached by the BOD to take the CEO position during Bill Owens time along with the well publicized failure of the two Garys to implement their ideas was seen by many in the industry as what would ultimately lead Nortel down its current path.

MZ may have brought some much needed operational improvements but as many have pointed out that the GE mentality would not be enough to provide Nortel with the crucial strategic decision making that it needed.

Selling Nortel's blade server business to IBM and UMTS to ALU can not be interpreted as strategic moves especially since UMTS was a cash drain on Nortel's cost structure,and so therefore would be viewed as just more cost cutting that which would be MZ area of strength.Aside from the purchase of Tasman there really wasn't any major strategic moves made so far under MZ.

Finally I don't think MZ is the dishonest leader that some are making him out to be,but rather an individual with an extra large ego from his involved success at Motorola who is not the ideal CEO that Nortel needed at a critical time just after the accounting scandal in 2004.

As a shareholder who has lost way too much money on what has amounted to incompetent leadership,I think it is only fitting that top management feel the full impact of what poor decision making has lead to,even though it won't recouperate shareholders losses along with employees uncertainty about their pensions and severance,it will be a little easier to swallow if MZ and his team don't walk away with millions in undeserved compensation.

Psychiatrist,

Your apologies are hereby accepted.

For info, Tasman was in fact arranged/acquired prior to Mr. Z’s arrival. The only acquisitions made during his tenure were the 2 (perhaps 3) ‘dogs with fleas’ that John Roese lobbied for. Best of luck to you in the future…--bb

Is it a good or a bad sign when excecutives leave for bigger and greener pastures? Are yours just hanging around waiting for severance, perhaps?

I snagged a job at Nortel in '99 I believe in part because quite a few regulars were moving on to "bigger and better things" elsewhere.

This is priceless:

But Mr. Monty, who is 50, thinks that Mr. Roth may actually have a more difficult job than he himself had trying to revive Northern Telecom. ''It's probably easier sometimes to pick something up that's troubled than to pick up something that's doing well,'' he said. ''The big issue for John is execution.''

Mr. Monty picked up the tale: ''When I came in I went out to see customers. The word coming back was, 'Listen, you've taken your eye off the ball. The product doesn't meet what we expect and the platform will not allow us to generate more revenue because the functionality is not there.' We had a lot of work to do.''

And it needed to be done quickly. Seven months after reporting its record 1992 earnings, Nortel announced that it would take a loss of $1.03 billion for the second quarter of 1993, in part to lay off 9 percent of its workers.

''Nothing fails like success is the way I look at it,'' Mr. Monty said. ''We had fallen in the trap of being too successful and we didn't think we couldn't be successful.''
In fact, Nortel has lost a number of top executives recently, including Gerald J. Butters, who defected to Lucent and now runs that company's biggest North American operation; Donald K. Peterson, who is now Lucent's chief financial officer, and David Twyver, Mr. Roth's immediate successor as head of Nortel's wireless business, who became chief executive of Teledesic, a small satellite communications company founded by Microsoft's chairman, William H. Gates, and the wireless power Craig McCaw.

And of the top executives who remain, none are women -- a situation Mr. Roth says the company knows it must change.

And yet Mr. Roth does not intend to alter too much else about Nortel or its direction. After Mr. Monty's successful high-wire act, what the BCE board wants most from Mr. Roth is a pair of steady feet.

Lessee - Nortel's stock was a $20ish flatline from '83 to '89, hit $30 by '90, doubled into '92, then dropped back to $30 by '93. Still up 50% from when Stern first took over.
Stern was boss 1989-1992, Monty from 1993 - 1997 with stock somewhere around $120. No?
The "attitude" was always there according to:

October 6, 1997

While Lucent is almost twice the size of its rival north of the border, some analysts think the Canadian company may now enjoy a superior strategic position. That assessment has been reflected in the stock price this year, which closed at an all-time high of $107.5625 on Friday.

All of this would have been hard to predict in 1992, which Mr. Roth recalls as the company's nadir. Then Jean Monty arrived from the telephone company Bell Canada.

''Jean came in when we all thought there was only one way to go -- up,'' Mr. Roth said. ''We all felt that the organization was as low as it could sink, from a certain point of view, of morale and everything else.''

At the time, Nortel was being run by Paul G. Stern, an intense former I.B.M. executive who had forged a reputation as a relentless cost-cutter with a manner described by many at the company as brash.

Mr. Stern joined the company in 1989, when Nortel was still riding high on the success of its digital telephone switches. In the 1970's, while AT&T was still making mostly analog switching equipment, Nortel was the first to market a digital switch -- in effect, a giant telephone network computer that allowed carriers to save money and eventually offer advanced functions like call waiting.

Mr. Stern, who declined to be interviewed for this article, clung fast to the product line he had inherited and appeared to stake his future not on technologically innovation but on reducing costs and driving up the price of the company's stock.

The strategy worked for a few years. In 1992 the company posted its richest year to that point, earning $255.6 million on sales of $8.4 billion. But along the way the company failed to make the research and development effort necessary to modernize and streamline the convoluted software that ran Nortel's flagship switches. The software had been upgraded little by little over the years as new switches were sold -- but never in a coordinated fashion.

''Imagine if there were Windows versions 1 through 1,000,'' said Michael Arellano, a longtime telecommunications equipment analyst. ''It would be an incredible task to support that many pieces of software and Microsoft would never do that. Nortel had been doing that and as they added new capabilities the complexity went up exponentially and they started falling behind.''

A fairly intelligent summary of Nortel not just up to 1997 but even up to now since Nortel's main public carrier, wireless and enterprise platforms still rely heavily on a legacy core first developed in the late 1970s. And Nortel's optical business was first spun up not longer after that. The installed legacy from the spetacular spurt of innovation in the 70s and 80s is the biggest thing still keeping Nortel in business. Its a real tribute to the genius of Nortel's leadership and engineering at the time, especially when you consider that this legacy core has enabled Nortel to survive up until now in spite of the drumbeat of waste and incompetence since 1989.

I like DMS.

What about Paul Stern? Why is he not included here? He was more evil than most of these guys put together.

The fact is, only ONE of these Nortel CEOs presided over the company while it lost more than 99% of it's value. And the Board snoozed in their deck chairs while he did it. For three years and counting.

In all fairness if stock is the sole metric, Roth was actually the best CEO ever. His board took to snoozing on the job too (Dunn excluded).

Sure, Roth didn't create the boom, he was there at the (for him and lucky few) right time, stoked the gambling to a fever pitch, then cashed his chips and booked.
He was the enabler, the gang founder who - willingly or no - planted the seeds of addction among the masses, the hubris and blase within Nortel that still exits in the form of "I Believe" to this day. He was the most cunning of the bunch in that he disappeared quietly into the night, leaving the equivalent of dope, money and guns in the hands of men, women and children.

(Uh-oh, this makes the masses sound kinda dumb and gullible, and it paves the way for folks to thread Godwin's Law into the Nortel debate.)

Are the masses dumb? Individually, probably not. Collectively, things tend to break down, especially if there is a concerted effort to deceive people.

Skilled PR-opaganda people know this, and this is why Nortel has hired so many of them to spread deceit not only amongst shareholders and the public at large, but also employees.

You can see this in every Zmail that urges employees to ignore the "media bias", and keep your head down and tune out reality. Zmails also harp on about the supposed "positive feedback" that Zman's been getting from employees and points out proof of this with the "I believe" group, a movement they very likely had a hand in creating. ("Reality creation" is a cornerstone of propaganda)

Effective propaganda knows that lies grow like a snowball. Once it gets started many give in, either directly, or (more likely) indirectly through apathy/willing ignorance because the situation has been made so bad.

There is hope though: The truth always comes out, in one way or another. This can be seen in E&Y Monitor report, where the true level of corruption has been demonstrated, once and for all.

And this happens time and time again. Regardless of the revolution and its cause it ultimately devolves and fails.

Greed, deceit, incompetence and desperation
brilliant! haha! from left to right?

I would remove Roth from the broth though...
Nortel was booming when he bounced. remember?
Again, take Roth out of the equation totally given exorbitance is not illegal and, if anything, perhaps envied at worse; let alone well merit given he was the one to bring Nortel to its rise in its rise-and-fall. He was not at the crime scene either. Drop it.

Dunn? We all know what happened with Dunn. I suspect the millions of documents in his court trials will reflect actions not unlike Ebbers' or Skilling's. I am a bit squeamish about what professional hangmen do and not qualified to comment as is braving embarrassment =)

Owens got too little credit. He walked on water, stabled the stock amid their darkest hour of silence and delay, with truly unquestionable morality needless to say, He is the one who admitted many of the crooks were still at Nortel hard to find! A really good man at really bad company. I also believe he could have manged costs exponentially better. Did anyone even read Owens book! He specializes in cost management, among a host of other subjects to his formal accreditation. Nortel seemed jinxed to do all the wrong things and losing Owens alone may have been the beginning to their end /downfall!

Mikey?well? hahahaha Mikey... what can I say, read my posts, endless contradictions and who the heck hangs with the Carolina strangler if I might be so rudely crass?

Mike has a name that is too long. They paid a premium for an axe-cutter's track record, a green CEO for the ultimatum and eulogy, like a bad salesman from a golden territory. He spent 25 stagnant years at GE albeit climbing the ranks to perhaps reflects some form of one company stagnation. He has a BSc. seceond less qualified to Dunn to run a company of this past magnitude though he boasted he could. Are credentials correlated here?

..and to pay more for him after Owens! laughable in their series of endless punchlines...

Is Mikey likeable? Hell no, loveable is more like it. He strikes me as the most honest and moral clean cut leader one is only too proud to be exposed to.... every one wants to hug Mikey. Unfortunately, actions spoke louder than words to make him....well, as good as anybody else and nothing special in retrospect at best. I wished he'd done better at Nortel for no other than his rags to riches story =), as I love happy endings... but

Nortel just continued with the crash course they were on. The green team replacing a corrupt teflon dream team as their final nail the way I see it, making all the wrong decisions to look big and now ..

So, remove Roth and Owens.
Is 2 out of 4 CEOs over such a short period bad?

May I suggest instead of greed, deceit, incompetence and desperation, "see no evil, hear no evil, speak no evil" =)

ahhh, Nortel... the punch lines never ceased post the largest fraud in their country.

It's good to see some responsibility attributed to analysts / fund managers etc... The market's reaction to certain events (eg. analysts conferences) was astounding.

Leaders do make a difference but to judge the rise and fall of a company solely on the leader himself seems incomplete. The decisions that the leader made, and the decisions made by others, seem more relevant. It would be interesting to look at how those decisions (all the way back to 2000 and before) and outcomes brought the company to where it is today. Not just the M&A decisions but the decisions related to HR, compensation, IT systems, sales structure/strategy, marketing, etc... The outcome of past decisions can help explain the present and potentially contribute towards understanding the future.

One example: the massive elimination of HR advisors back in the mid nineties. The HR team dropped by hundreds while people managers were given individual contributor responsibilities. Employees were advised to manage their own career, under the guidance of their managers. But neither the employees nor the managers (coaches) had the tools/training to do so. Instead of feeling empowered, some employees felt abandoned. And the employee/manager relationship, which used to be so core to employee satisfaction, was weakened. Over the years, the relationship was further eroded and an "us versus them" environment evolved. Middle managers became stuck in the middle - unable to set strategy, forced to implement strategies they didn't always believe in, and unable to support (to any great extent) their employees.

The power of a global company is in the transfer of core competencies throughout the subsidiaries. I wonder how the decisions of the past 15 years supported or inhibited the creation and transfer of strategic knowledge.

funny to see Z shake his hands so much when speaking. almost like getting the attention to his hands and not listen to him.