Nortel Fires CEO

Nortel Networks Ltd. (NYSE/Toronto: NT) this morning announced that it had dismissed its president and CEO, Frank Dunn, and replaced him with William Owens (see Nortel Dismisses Dunn).

The press release says Dunn "has been terminated for cause." The cause is related to an independent review of the circumstances leading to the restatement of Nortel's financial results for 2000, 2001, and 2002, and the first two quarters of 2003.

William Owens has left his previous job as chairman and CEO of Teledesic LLC, a satellite communications company, to take on his new role at Nortel. He has been a director of Nortel since February 2002.

Nortel's former CFO, Douglas Beatty, and former controller, Michael Gollogly, have also been fired. They've been on paid leave of absence since March 15. A further four "senior line of business finance executives" have also been placed on paid leave of absence while investigations continue.

Nortel's Audit Committee has made some "preliminary partial estimates" of the impact of the restatements. Net earnings for 2003 are likely to be halved, and net losses for previous years will be reduced. There's "no material impact" on the company's cash balance at the end of 2003.

We'll have more on this story as details filter in.

— Peter Heywood, Founding Editor, Light Reading

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opticalulcer 12/5/2012 | 1:55:13 AM
re: Nortel Fires CEO to know that they are finally going to clean up...just hope it doesn't stop with the financial guys...there's a few others we'd like to see leave as well.
eyesright 12/5/2012 | 1:55:11 AM
re: Nortel Fires CEO Eh?
BackSlash 12/5/2012 | 1:55:09 AM
re: Nortel Fires CEO This is one of the strongest worded press releases concerning the removal of a CEO. They chose not to say, "...Dunn has chosen to pursue other options...". Nope.. they said he was fired.

Good on them.. now, lets see if the rest of the shoes will drop..

dodo 12/5/2012 | 1:55:08 AM
re: Nortel Fires CEO In addition, the boards of directors of the Company and NNL announced that four individuals who were senior line of business finance executives of Nortel Networks during the periods under review have been placed on paid leave of absence pending further progress of the independent review.

"The Board of Directors believes that the actions announced today are about accountability for our financial reporting and are in the best interests of the Company and all of its stakeholders, including our investors, customers and employees," said Lynton (Red) Wilson, chairman of the board, Nortel Networks. "These actions are an important step in the process of restoring confidence in the Company's leadership and financial reporting."

Nortel is hosting a teleconference/audio web cast this morning
dodo 12/5/2012 | 1:55:08 AM
re: Nortel Fires CEO By being fired, does that mean that the 3 will get a severance package:-(

I believe that the greed for big yr-end bonuses could have been their own "undoing"

Looks like it ain't over yet. The clean-up has just started .

where are the stock pushers( analysts) who claimed that this restatement would not have much impact?
dljvjbsl 12/5/2012 | 1:55:07 AM
re: Nortel Fires CEO
Many tens of thousands of people depend either directly or indirectly on Nortel for their livlihood. I hope that Nortel will be able to move beyond its current problems and prosper in the future.
fgoldstein 12/5/2012 | 1:55:06 AM
re: Nortel Fires CEO It's quite rare to see a member of the executive class (you know the type; no matter how badly they do at one place or another, they get picked up for another big-bucks position soon after being dumped, and their golf game isn't interrupted) "terminated for cause". That's a sign that the markets are tired of the same old same old.

Back at DEC, during the company's decling years, VPs were dropping like flies. The press release used coded language to say whether they were fired or quite voluntarily. I don't remember the exact terms, but euphemisms like "pursue other opportunities" were understood by the conoscenti to mean something. Nobody was "fired" like Dunn.
net_exprt 12/5/2012 | 1:55:04 AM
re: Nortel Fires CEO here comes another wave of layoffs .... the sad thing is that most of those effected had nothing to do with this scandal and those who had, will keep their jobs
inauniversefarfaraway 12/5/2012 | 1:55:04 AM
re: Nortel Fires CEO Sadly, drastic action such as this will likely not impact what appears to be a systemic problem. Will these recent firings even satisfy the public at large? Are these people going to get charged at all? What should be alarming to all is that these flagrant violations escaped the board, post-Enron audits, analysts, as well as the army of senior management, as well as government officials. Since the Canadian government even provided Nortel with a $750million bailout under the guise of export reimbursement package, one can only wonder what is going on inside this company. Will the culture change within Nortel? Is that possible at this stage? Does Nortel have a culture of rewarding bad behavior? Can anything produced by this company provide a reflection of it's actual performance? Under the combined tenure of Roth and Dunn, have we witnessed over 7 years of fiction? Are these folks lying to the employees, shareholders, bod, analysts, investigators, and everybody else? How does a corporate culture promote that, and how can that be changed?
lokicat 12/5/2012 | 1:55:03 AM
re: Nortel Fires CEO As to whether they get termination packages .... fired with cause means NO PACKAGE!
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