Ex-Cisco Exec Named Nortel COO

Nortel Networks Ltd. (NYSE/Toronto: NT) has set the wheels in motion for some widely anticipated executive changes.

This morning the company named Gary Daichendt, formerly executive vice president of worldwide operations at Cisco Systems Inc. (Nasdaq: CSCO), as Nortel's new president and COO. Daichendt now looks positioned to be groomed as Nortel’s next CEO. Former president and CEO Bill Owens will shed some of his operational responsibility, including the title of president.

"We are playing to win and Gary will play a critical role in our doing so," Owens says in a company statement released this morning. "He is a world-class leader with unquestioned integrity and one of the top technology executives in the world.”

Nortel shares barely registered the news, trading down $0.01 to $2.95 this morning.

Daichendt rose up through the ranks at Cisco in the late 1990s and, according to some, was once considered the number-two to Cisco CEO John Chambers. But he retired from Cisco in 2000 and was surpassed in stature by some of Cisco's more prominent executives such as Charlie Giancarlo, senior VP and chief technology officer; and Mario Mazzola, Cisco's senior VP and chief development officer. All in all, the Nortel job looks like a big step back into the spotlight for Daichendt.

Prior to Cisco, Daichendt spent ten years at IBM Corp. (NYSE: IBM). He has been on the board of numerous startups, including Chromux Technologies Inc. and Packet Design Inc. As of today, Daichendt is no longer listed as a board member at Packet Design, but he's still on the board at Chromux, according to the company's Website.

He has a reputation as a top-notch operations expert, and has authored a book on using sophisticated networking to streamline supply-chain operations. Daichendt is also listed as a speaker on the Website www.christianity.com as a member of the board of directors for an organization called Walk Through the Bible. "Gary speaks frequently to both Christian and non-Christian groups around the country," says the Website.

Although the hiring of Daichendt signals some big changes at Nortel's top ranks, the moves aren’t as dramatic as many had expected (see Nortel's CEO: Next to Go?). Many expected Owens to relinquish the CEO title, or even step down,as Nortel sought a new CEO. The current developments indicate that Nortel’s board of directors and Owens are pursuing a more gradual succession strategy.

Nortel says Daichendt will be responsible for leading Nortel's carrier and enterprise businesses, research and development, services-and-supply chain functions, and global sales and operations. Daichendt will report to Owens, along with other senior executives.

In related news, Nortel says Peter Currie, who became Nortel’s chief financial officer on February 14 (see Nortel CFO, Controller Step Aside), will become executive vice president and CFO effective March 14, 2005. Nortel’s statement says this “reinforces the critical importance of Currie's role in the transformation of Nortel's financial organization.”

— R. Scott Raynovich, US Editor, Light Reading

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