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Nortel Changes CTO – Again

Light Reading
LR Mobile News Analysis
Light Reading
3/31/2005

It's not quite the invasion of the Pod People, but Nortel Networks Ltd. (NYSE/Toronto: NT) executive ranks are filling up with Cisco Systems Inc. (Nasdaq: CSCO) veterans, as Nortel today hired yet another new chief technology officer.

Effective April 4, the CTO will be Gary Kunis, who was Cisco's chief science officer until 2002. He will report to Gary Daichendt, the former Cisco executive VP who became Nortel's president and COO just this month (see Nortel Swaps Out CTO and Ex-Cisco Exec Named Nortel COO).

Nortel officials weren't available for comment. A Nortel spokeswoman confirmed Daichendt and Kunis knew each other at Cisco, though, so it appears Daichendt wants a familiar face in the ranks. Either that, or he's trying to pack Nortel with guys named Gary.

Former CTO Brian McFadden has not been sent to the graveyard of non-Garys. He's moved to the post of chief research officer (CRO?) and will continue to report to Daichendt.

Nortel has now changed CTOs twice in six months. McFadden, formerly president of Nortel's optical networks efforts, had just signed on in October to replace Greg Mumford, who had held the post since late 2001 (see McFadden In, Mumford Out as NT CTO and Nortel Bets on Mumford).

That Daichendt and Kunis hail from Cisco is significant, although it suggests two opposite paths Nortel could follow, says Steve Kamman, analyst with CIBC World Markets. One is to "double down" on enterprise and IP -- Cisco's specialties -- probably with some LAN or wireless acquisitions to flesh out the portfolio. Then again, he says, it's possible Nortel is moving itself away from those areas, hoping Daichendt and Kunis can seed an alliance with Cisco.

Either way, "I do think it points to [CEO Bill] Owens putting his own stamp on the company, which is a good thing," Kamman says.

Other recent executive changes by Nortel include the replacement of the company's CFO and controller (see Nortel CFO, Controller Step Aside). Investors seemed fairly unphased by all this executive-shifting excitement. Nortel stock traded down 9 cents (3.2%) at $2.73 late this afternoon.

— Craig Matsumoto, Senior Editor, Light Reading

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