Nortel CEO Announces Nortel to Undergo Big Changes

Nortel CEO Mike Zafirovski said the networking company would look to exit businesses where it can’t gain at least a 20 percent market share. However, he did not specify which businesses these might be.


However, Zafirovski spoke candidly to the press at the CTIA Wireless conference, acknowledging Nortel’s poor financial performance for the last several years.

“Our ability to execute has been excellent in some places, but overall, average to below average,” Zafirovski said. “We’re too complex to operate as a company. We tried to be too many things to too many people. As a result, we’re not as strong as we’d like to be in a number of areas.”

Nortel is scrutinizing its own business in the wake of some accounting that has been shaky since the late ‘90s.

Last month, Nortel said it would restate 2003 to 2006 results and some earlier results after an ongoing review showed instances where revenue was recognized sooner than it should have been.

Zafirovski says the company is turning around by looking to hire a chief marketing officer, a chief technical officer, and a couple of presidents that will execute a “business transformation.”

The company expects to expand its operation margin by $1.5 billion by 2009 and improve the balance sheet through stronger corporate governance.

“This used to be a great company,” Zafirovski said. “It can be a great company again.”

Zafirovski, who joined Nortel from Motorola last October, said Nortel would look to strengthen its “innovation DNA,” through its successful technology businesses, such as VoIP gear, IP Multimedia Subsystems (IMS) and WiMax.

He added that the company would look to shed businesses where it couldn’t gain at least a 20 percent market share organically, or with the help of partners over the next three to five years. Although such businesses currently account for 65 percent of Nortel’s revenues, the company has already gone through with one of these vows.

In February, Nortel sold its Blade Network Technologies business to Garnett & Helfrich Capital IBM, HP and Such Microsystems dominate the blade market for telecommunications companies.

Zafiroysky also added that he considers Cisco Systems and Ericsson as primary threats.

Summary

Nortel CEO Mike Zafirovski said the networking company would look to exit businesses where it can’t gain at least a 20 percent market share.


Contact the author.
Post your Comments
Please ensure your comment is appropriate before posting.