Nortel CFO Leaves (Again)

Nortel Networks Ltd. announced today that CFO Peter Currie will be leaving his post effective April 30. And get this: He's not being fired. (See Nortel CFO Stepping Down.)

Currie took over the CFO chair one year ago to help Nortel recover from several years of financial scandals and mismanagement. Between February 1999 and April 2004, two of the three men who held the title of Nortel CFO were fired for cause. (See Nortel CFO, Controller Step Aside and Nortel CFO Out .)

Table 1: Nortel's CFO : A Retrospective
Name Appointment month-year What happened?
Peter Currie February 2005 Announced in February 2006 that he would leave his post as of April 30. No successor was named
William Kerr April 2004 Stepped aside in January 2005, following several delays with Nortel's earnings statements
Douglas Beatty July 2002 Terminated for cause in April 2004 in connection with a management scandal
Frank Dunn February 1999 Became Nortel's CEO in Nov. 2001. Terminated with cause in April 2004
Wes Scott April 1997 Became vice chairman of Bell Canada in Feb. 1999
Peter Currie June 1994 Joined the Royal Bank of Canada as executive VP and CFO
Martin Mand February 1990 Retired in June 1994
Terry Nickerson February 1988 Appointed as executive VP, finance and operations, Northern Telecom World Trade in 1990
Source: Light Reading, company reports

So Currie, for the second time, is leaving Nortel on good terms. Obviously a glutton for punishment, Currie had previously held the Nortel CFO post between 1994 and 1997, leaving then to join the Royal Bank of Canada.

In a prepared statement, Currie said: “I believe that I have achieved at Nortel what I returned to accomplish. We have transformed the finance organization, significantly strengthened internal controls, and improved the balance sheet.”

While Nortel is more financially stable, it is still figuring out what it wants to be when it grows up.

Nortel claims to competes with the likes of Cisco Systems Inc. (Nasdaq: CSCO), but the company's market capitalization is barely bigger than that of Juniper Networks Inc. (NYSE: JNPR).

It ceded broadband access to smaller competitors. It is playing second fiddle to Alcatel-Lucent (NYSE: ALU) in the rollout of wireless networks. And now it has designs on IPTV, though it has no products to speak of in that space, and sources suggest it will have to buy something fast. (See Sources: Nortel Planning IPTV Acquisitions.)

So, is Nortel's CFO departure a promising sign that the Canadian turkey is about to splash out some cash for some acquisitions? Or is it another detour on the company's long, wobbly road to recovery?

Wall Street's stock hawkers are split down the middle.

One view is that Currie's exit will curb Nortel's M&A appetite. "While Mr. Currie plans to stay on to ease the transition to the new CFO, we believe his departure in the midst of a companywide restructuring is nonetheless disruptive, and it will likely further slow the company's progress on executing on its plans," writes Inder Singh, an analyst with Prudential Equity Group LLC .

But one man's disruption is another's opportunity. "We believe his departure is likely due to Nortel looking to be more aggressive in pursuing growth via M&A given the likelihood that most restructuring initiatives and internal financial controls are likely in place," writes UBS Research analyst Nikos Theodosopoulos.

Somewhere out there, shrugging his shoulders, Citigroup telecom analyst Michael Genovese offers this view: "We are not surprised since, like former CEO Bill Owens, he specifically joined the company 2 years ago to restore financial controls and credibility, and this task has largely been accomplished."

Nortel shares were down $0.66 (2.49%) to $25.82 in early afternoon trading today.

— Phil Harvey, Managing Editor, Light Reading

Pete Baldwin 12/5/2012 | 3:15:13 PM
re: Nortel CFO Leaves (Again) Perhaps we should add "bizarre gardening accident" to the table in the story.
numinary 12/5/2012 | 3:15:13 PM
re: Nortel CFO Leaves (Again) Nortel : CFO :: Spinal Tap : Drummer

In order to understand this, you must have watched the movie spinal tap...
hundscheidt 12/5/2012 | 3:15:10 PM
re: Nortel CFO Leaves (Again) Euh, gents... starting in feb 2005, leaving in feb 2007 is still two years. Just a detail.
dljvjbsl 12/5/2012 | 3:15:10 PM
re: Nortel CFO Leaves (Again) Nortel --> 2300 more layoffs (RTP gone??)
--> death spiral continues

Why does Nortel exist?
DCITDave 12/5/2012 | 3:15:10 PM
re: Nortel CFO Leaves (Again) By his track record I'd predict we'll see Currie as Nortel CFO again in May 2014.

SolitonWave 12/5/2012 | 3:15:10 PM
re: Nortel CFO Leaves (Again) Looking at the Telecom vendor landscape one can see 3 giants (Alcatel-Lucent; Ericsson; Nokia-Siemens) and 1 good contender, Huawei, with true potential for internal growth (Cisco is in another league because they don't depend on carrier business only). The rest of the guys should seriously think how to compete out there because this telecom industry will not be a pleasant habitat for small sharks. Only white sharks will survive. Funny thing: This problem particularly affects several North-American companies (Motorola, Nortel, Tellabs, Ciena).
dljvjbsl 12/5/2012 | 3:15:05 PM
re: Nortel CFO Leaves (Again) Derek de Cloet, business columnist for the Globe and Mail seems to agree with my death spiral comment. Here is an extract from his column on Nortel. One other thing he pointed out is that Nortel and Cisco have the same price to earnings ratio. Bubble time again.

It ain't easy being Mike Zafirovski. Nortel Networks' chief is an ambitious guy with ambitious goals -- he wants to do nothing less than "recreate a great company."

But it isn't as much fun when "greatness" does not equal "bigness." Nortel's only hope, for now, is to try to shrivel its way to success. Mike Z knows it, investors know it, you know it and the staff know it, too. Fearing for your job is not exactly a new thing at Nortel; it's a permanent state of affairs.

So 2,900 more people will be gone, joining the tens of thousands who have been let go over the past dismal six years. There are many ways to illustrate how Nortel has become the Incredible Shrinking Company, but here's one of the best: Since 2000, it has shed 20 million square feet of real estate. Picture the tallest office building in downtown Toronto, multiply by seven, and you get an idea of how much space that is, and how many people have been shown the door.

Sign In