Mike Z.’s Bad News E-Mail

By Mark Evans | Published: February 25, 2009

Here’s the e-mail that Mike Zafirovski sent to Nortel employees earlier today:

We announced some tough but important decisions today – decisions that will significantly impact many of you. In a press release just issued, we announced the reduction of an additional 3,200 positions. This is in addition to the reduction of roughly 1,800 positions still to be completed from previously announced plans. For those of you in North America being notified in the coming months, you may file your claims as unsecured creditors.

This obligation is real, but due to our financial condition and present situation, we are unable to fulfill this commitment to you. I am committed to maximizing any potential payout for impacted employees, which ultimately depends on how successful the restructuring plan will be. At 12:00 p.m. EST, I’ll address you in a global GIS session (details below). You deserve as much clarity as possible, as soon as possible.

Joining me on the GIS will be Pavi Binning, our CFO, and Elena King, SVP of Human Resources. Pavi will walk you through the restructuring process we are in and where we stand today. Elena will be there to cover some of the specific issues around the upcoming reductions. Please join us. Our company is in a difficult situation. The harshness of the economic reality and lowered spend profile of our customers, combined with the worries associated with our filing are directly impacting our revenues.

We must act quickly to adjust our costs to the realities of our industry and of our business. First, to achieve this, we cancelled equity-based compensation programs and determined there would be no 2008 bonuses under the Nortel Annual Incentive Plan (AIP) – decisions which impact eligible employees, including all executives: Bonuses under AIP for 2008 will not be paid. Nortel is seeking Canadian court approval to terminate its equity compensation plans, including all outstanding equity under the plans (including stock options, stock appreciation rights, restricted stock units and performance stock units), whether vested or unvested, and no equity will be awarded in 2009. Second, in addition to these actions, the Board also approved other employee programs to help meet our business objectives.

These programs follow best practices for companies undergoing restructuring and aim to help us emerge as a more focused and competitive company. We have decided to keep the AIP in place for 2009. With one change – calculations and payouts will be made quarterly instead of once a year. In addition, after 45 days of employment in any given quarter, you are eligible for the full AIP for that quarter if your employment is terminated before the end of the quarter. Initially, these payments are based on revenue, cash and customer-oriented operational metrics of lead time, outage recovery, and service responsiveness. This is a step forward and recognizes the immense task ahead, and the important role that all our people play in driving results.

This will provide a more immediate incentive for employees. We will also seek to implement, with court approval where required, some incentive and retention plans for a number of employees at various levels that are critical to our ability to restructure the company while under creditor protection. This is a typical practice for companies undergoing restructurings of this nature. I know many of you are asking for more detail on the components of the overall comprehensive restructuring plan and what the timetable is for its communication. You are eager to understand what kind of company we will be going forward – what businesses and marketplaces we will be in – what our investment strategies will be – and so on.

It is my hope that in today’s GIS, Pavi, Elena and I will be able to at least shed more light on the timetable and process. What is not changing is our deep commitment to our customers and our efforts to stabilize the business. We must continue to serve our customers well if we are to realize long-term success. I can tell you after meetings and conversations that our customers are supportive of us for now, but we have to continue performing and emerge from protection quickly if we are to secure their business for the future.

We are making the tough decisions we must to restructure Nortel and work to successfully emerge from creditor protection. We are making progress toward that objective every day.

Thank you for all you are doing for Nortel. Mike

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  • Nortel_Sucker

    Dim Reaper? Ya right. How about Grim Nerdboy? Here's this little bitches story. This Nerd is typical. Got laid off and now lives in mommy's basement. PS2 and Penthouse are his his only friends. Scared to leave house at night. Transpots via bus and bike with cute little bell. Too pathetic to get a job. Nortel hired him as one of those empathy cases. Weeded out quickly. Spent severance on trying to buy friends, didn't happen. Spent last few bucks on hookers. Part time job, washing NT employees cars.

    So Dim Reaper, do me a favour and bring me a can of beans when I get laid off. I'll do your mother a favour , toughguy, and bitch slap you for her. What a puss.

  • Paycheck

    Looks like another monitors report has been posted on the E&Y site!!

  • tryn2makealivin

    Can you post the link…

  • DRP666

    Maybe some consideration should be given to what layed offa nd soon to be layed off are going through…in some cases….life or death. With all the bullshit that goes on in these blogs, people should remember that. At some point, people may get very desperate and those inflicting this criminal, unjust, unethical pain should be looking over their shoulder. Thats a fact…..and you all need to live in the real world…not in front of your laptop in your comfy home office blogging all day.

  • exnortel2

    I have been reading all the posts below… and yes, we should just stop whinning and get on with our lives, unfortunately it is not that easy. I was one of those RSCNE and I am still waiting for my paperwork. I JUST received my ROE which by law should have been issued within 5 working days of my severed date. I would love to completely sever my ties with this boat anchor but until I get my papers I am still an active employee in the systems. All I can say is good luck to those who will be severed after me…. you will still be tethered for months.

  • Moose_Chaser

    BWAAHAHAHAA !!! Classic !!

    Yeah, Dim Reaper is a little, angry, twink-in-denial.

    Please continue to treat him like the pin-cushion he is.

    Thanks.

  • Hotwheeler1

    This really emphasizes Z's themes from yesterday GIS

    1) Time is not the essence (translated: I have enough cash to last my existence on earth).
    2) Realism or optimism (translated: bad economy, not my fault)
    3) Don't lose another customers (translated: screw the new customers, we don't need them)

  • horace_grimswold

    Chainsaw Mike doing what he does best.

    Weren't Novera and Ping-Tel supposed to save Nortel?

  • ttd

    How long ago did you leave and were you provided with an official termination date?

  • less

    I think Grimm is using AAN to indirectly apply for a managerial position at NT. Cuz NT can always use a few more black-belting leaders to put their underlings back in their respective place.

  • Lied2Me

    Thanks for the laugh…. Just looked at the LG-Nortel web page, you know there still isn't any mention of the Novera EFA products. What a goofy web site. Can you imagine the poor Novera folks….. “Hey we're being bought”…. “on no, it's Nortel”….

    What exactly is the LG-Nortel gig anyway? I'm sure the Novera folks are praying that NT cuts them loose so LG can take better care of them.

  • less

    Perhaps somewhat ironically the intro is reminiscent of NT in its heyday 10 years ago – obsolete (yet functional) and MIB hardware alike thrown into Dumpsters, ditto countless miles of – ick – used fiber, cables and unsorted consumables, stress balls, marble team builder award plaques, non-matching office supplies, propietary software on floppies and CDs, tons of printed documents, Powerpoint slides and unused yet toxic cell phone batteries.

    Why the rush to simplify? Because there were customers out there willing to pay enormous mounds of cash for the very lab square footage all this junk was resting on.

    The customer spoke and Nortel listened. Then they jetted off to play golf together somewhere.

  • One_way_ticket_to_Chapter_7

    Call me crazy but I just listened to the GIS again in the playback.

    I can't believe how incoherent that call was the second time through. Only Pavi can speak english and what he says is meaningless dribble. Elena king is an embarrassment. Mike Z – well, what can you say.

    Mike Z and Pavi talked endlessly about how well they're getting along with the monitors and various committees….blah…blah,,,,, Do they not know they have a company to run? ….. like with products and solutions that are decaying as we speak.

    These guys don't have a clue. I am now convinced they are driving this straight to ch 7 on purpose and sucking as much as they can out of the corpse along the way. He lowered expectations right in the middle of the call by saying “only 50% of companies make it out of ch 11″ or something to that effect because he was even more incoherent than normal.

    Meanwhile, Mike Z is feathering his own nest with nortel $$$$ by hiring hordes of consultants to give him (and his cronies) a place to go after the lights go out at Nortel. I think somebody mentioned this last part before but it is abundantly clear to me he doesn't need to be a CEO again when he can be a wily, restructuring principal managing partner (or something to that effect) charging a $1,000+ per hour for part time work.

  • Purpletip

    And the Emmy goes to: Desk Jockey for Nortel episode 7. I laughed so hard I cried. Thanks for the humor, it makes this horror we're living through bearable.

  • NTDinosaur

    I question what the point was of making this announcement now. Why announce reductions without a plan of when or what BUs they will be applied to? Everyone knows that cuts are coming, what creditors and employees want to know is how these cuts are going to be applied in a meaningful way. The announcement certainly wasn't done to pump the stock price (lol), so without substative information about when and where the cuts will be made, this is nothing more than another smack down on already demoralized and demotivated employees and negative fodder for the media.

  • protosphere

    “The immense task ahead”- I'm a poet and I dunno it… by Mikey Z.

    The “spend profile of our customers, combined with the worries associated with our filing are directly impacting our revenue”
    “Please join us. Our company is in a difficult situation. The harshness of the economic reality” of what to do

    “important decisions today – decisions that will significantly impact many of you. In a press release”
    “due to our financial condition and present situation, we are unable to fulfill commitment” with ease

    “For those of you in North America being notified in the coming months, you may file your claims as an unsecured creditor”
    “in addition to these actions, the Board also approved other employee programs” you will not be eligible for

    “With court approval where required, some incentive and retention plans for a number of employees at various levels”
    We know what we are doing, we're little devils.

    “What the timetable is for its communication. You are eager to understand …what kind of company we will be …what businesses and marketplaces we will be in…” nothing my friend

    “we have to emerge from protection quickly if we are to secure” orders
    “We are making the tough decisions” confined by borders

    “the immense task ahead”, is no task at all
    It's only draining and straining until as we stall to fall

    miles to walk before we sleep…to never wake we are in so deep

  • great_unwashed

    After much sideline viewing of this blog, I feel compelled to add my 2 cents following yesterday's GIS.

    First, the executive staff (such as they are) are in way over their head! When Pavi blatantly stated that we have to formulate a business plan, a collective chorus of laughter ensued! It is clearly obvious they have lacked the foresight to establish an effective one for quite some time now. And it's becoming more obvious with each Zmail that they will not be able to.

    Second, I adamantly agree that Z was mostly incoherent, and could not formulate a single thought that could effectively be communicated. He seems to be stumbling in the dark, bumping into thihgs.

    Third, how about this 2009 Annual Incentive plan? Are they saying that anyone that has been with the company 45 days into a quarter is eligible? It is implied that way, but I cannot put any stock in that statement. We are more than 45 calendar days into the 1st quarter! This needs to be clarified, because with so many misleading statements from the past, I would venture to guess that this will not happen.

  • sca41335

    Ref the 2009 AIP, apparently that is true. There is some info on the faqs for employees on the site they set up.

  • Paycheck

    Just click the link on the left side of this page where it says Blogroll

  • longgone

    “These guys don't have a clue. I am now convinced they are driving this straight to ch 7 on purpose and sucking as much as they can out of the corpse along the way.”

    as an ex NT'er looking in from the outside, I agree, One_way…..it sickens me to see what has happened to the NT I knew….best of luck to all

  • yetanotherexNT

    Every time I watch these videos, I remember a video made around 2000 using 'The Holy Grail' to depict Nortel's forays into developing IP products. It was brilliant.

  • less

    BWAHAHA!
    Cisco obviously still considers Nortel a dire threat. Its planted a shill in within the staid govenment of the global village in a feeble attempt to slander Mike's good name:

    http://www.vnunet.com/computing/news/2237255/no…

    Troubled networking vendor Nortel has quashed claims by a senior Tory that it is pulling out of its £40m sponsorship deal with the London Olympics organising committee for the 2012 Games.

    Shadow secretary of state for culture, media and sport Jeremy Hunt was giving a presentation today at the Communications Management Association (CMA) conference at the former TUC headquarters in London, during which he said that Nortel had pulled out as a sponsor.

    The supplier quickly released a statement before the afternoon presentations were due to start, denying Hunt's comment, and calling on the Conservative MP to retract his statement.

    “… or else we will ,uh, pull out of the Olympics.”

  • TongueInCheek

    From a raw business facts perspective there is a different way to think about this but it starts with a simple assumption.

    Assume: Nortel will not succeed by retaining all of the current business units. As such, 1 or more business units will be offered up for sale.

    Now the challenge is to think about this in a business sense from the perspective of the acquiring business. As a business owner, would you invest many millions of dollars in a business that isn't yet restructured? That answer is NO. Acquiring businesses will want Nortel to streamline the For Sale business unit before the acquisition occurs.

    It can't be an emotional decision. It has to be a business structure decision which unfortunately does create angst within the employee base.

    My position in all of this is to avoid the emotional components as they lead to constant complaints and bashing. There is no value in that at all if Nortel is to survive. I choose to look hard at the pure business structures that need to be done.

  • less

    They're talking 45 days Canadian…

  • skeptical2009

    I thought the CFO did a decent job of explaining where the company is, what the process of bankruptcy proceedings entail etc. Gave the impression of a competent hand..thank goodness. Mike fumbled his way quite a bit and while it's unfair to judge an executive by his speechmaking abilities, it was not a reassuring performance.

  • BruceH

    Mark – I thought you were going to moderate the comments. I'm all for free speech, but really, is there any point in putting up so many repetitive posts by GrimReaper.

  • Tk910

    I appreciate your comments, thank you. Sorry to be so hateful towards people on this blog sometimes, it's just frustration acting out. I don't mean anybody any real ill-will, just flashing my anger. Peace.

  • break_on_through

    While we may have doubts, we do beleive in our peers' ability and our innovation. We do beleive our customers are willing to support us with caution while we take our best shot at restructuring. We do beleive that this is a hell of a wake up call. We don't beleive that all is lost.

  • break_on_through

    Give it a break DJ. He is only being human and honest. Perhaps you should re-read his posts on the matter. It was harely “unwaivering praise”. His posts showed a lot more class than your imature comment.

  • broadbandbill

    second, third and fourth that…–bb

  • broadbandbill

    Mike has been fumbling for over 25 years but this time, the cameras are on him. Busted!!!…–bb

  • Moose_Chaser

    where can we find a copy of said video ?! MC

  • Got_Out_Years_Ago

    “Cisco obviously still considers Nortel a dire threat.”

    Dire threat for what? Explain this in detail. Spell it out.

    Nortel is nothing more than an ankle biter to Cisco. Somewhat annoying sometimes, nothing more. Perhaps you should learn how to read a balance sheet and compare both NT and CSCO. Do the research and get back to me with your findings.

  • yetanotherexNT

    I wish I knew … but I don't have a copy any longer

  • yetanotherexNT

    I wish I knew … but I don't have a copy any longer

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