Nortel Swings Axe, Switches CEOs

In the latest developments in an increasingly brutal restructuring, Nortel announced today after the market closed that it will change CEOs, cut 20,000 more jobs, and record a $3.6 billion loss in its third quarter. The telecom equipment maker also announced a slew of executive changes and lowered financial goals as it continues to try and find its way out of recession (see Nortel Changes Heads, Cuts Hands and Nortel Does More Shuffling).

Frank A. Dunn, Nortel's chief financial officer, will replace John A. Roth as president and chief executive officer effective November 1, 2001, the company says. Roth will stay on as vice chairman, and Terry Hungle, formerly president, finance, will take the CFO role.

Roth originally planned to stay as CEO through April 2002, but apparently events have changed the plan.

It's not always easy to pin down numbers on Nortel layoffs. According to the latest company press release, this round of job cuts will leave Nortel with about 45,000 employees by Halloween (October 31), when it plans to finish delivering pink slips.

According to spokesman David Chamberlin, the company will have about 44,500 employees by the end of the layoff. Nortel had 94,500 employees as of December 2000, he says, and now has roughly 64,500 employees.

Chamberlin says the latest reduction will cut 10,000 of those employees, while another 10,000 will be lost through the sale of "non-core assets," such as the sale of Nortel's Clarify customer relationship management business, announced yesterday (see Nortel Divesting).

In total, these divestitures are expected to bring roughly $700 million to Nortel in the fourth quarter 2001 and the first quarter 2002, Dunn says.

Nortel also says it will now focus on just three product areas -- wireless, optical long haul, and metro networks. Previously, the company had targeted five technology areas: wireless Internet, intelligent Internet, metro optical, long-haul optical, and voice over IP.

Included in Nortel's document dump this evening are several executive changes. Frank Plastina becomes president of Nortel's Metro Networks business, and Greg Mumford becomes president of Nortel's Optical Long Haul Networks business. Pascal Debon, formerly President, Europe, The Middle East & Africa, will take over as president of Nortel's Wireless Networks business. Debon replaces Jules Meunier, who is leaving the company.

The embattled company is also moving its breakeven point to "well below" $4 billion in quarterly revenues. "The business plan we're putting in place will make very good money [at a level of spending] well below $4 billion per quarter," said Dunn, in a conference call Wednesday afternoon. Previously, Nortel anticipated a breakeven rate of $5 billion in quarterly revenues.

Dunn says Nortel expects to reach its new breakeven point by the first quarter 2002.

The news, the latest in a long line of layoffs and financial losses at the networking giant, were particularly brutal and shocking because there had been a few signs that the bad days were ending at the company. Rumors had been circulating for some time that more cuts were on the way -- but none had expected them to be this bad (see Nortel: More Layoffs?).

During the conference call, the outgoing Roth seemed shaken as he repeated himself during the introductory remarks and noticably lacked his usual verve. Dunn, in contrast, sounded like a typical bean counter -- droning on about inventory writeoffs, pretax charges, cash performance, and specific incremental charges.

Analysts asked many questions. One wanted to know why Roth's successor had been picked sooner than expected. Back to his usual artlessness, Roth said that after an exhaustive search inside and outside the company, the board had "settled on Frank as the ideal candidate at this point in time."

— Mary Jander and Phil Harvey, Senior Editors, Light Reading
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ExNortel 12/4/2012 | 7:47:18 PM
re: Nortel Swings Axe, Switches CEOs OMFG...bahahahahahha


Thump....me hitting the floor....baahaha.. oh my god... hahahha..my gut is busting..haha

I can't stop laughing..hahahha ohhh my..thats really funny... is it april fools day or something?

The NT board approved this? What happened, they all call in sick for the this board meeting and forget to vote on the next CEO or somthing? bahaha...hahaha.....wow.

This is truly FUNNY..

The press better/should have a GREAT time with this.

And the stupider just keep getting more stupid.

Ex, and Glad to be EX.
dodo 12/4/2012 | 7:47:18 PM
re: Nortel Swings Axe, Switches CEOs EX

The bean counter is going to make Nortel "come together" ( pleasssssssssse)

As far as the Board is concerned, they are a bunch of OLD STAGNANT FOOLS (it ain't April 1st but Halloween is coming soon) who don't have backbones.

Waiting to read the newspaper tomorrow ( especially the Canadian onea).An Old BCE exec , Red Wilson in the office of the Chief Executive .He did nothing when he was CEO of BCE.

Oh my God, this is Fun time and it is nice to be on the outside looking in!!!!!!!!!!!!

sorry to the Nortelers and good luck to those who are still inside.
MajorKong 12/4/2012 | 7:47:18 PM
re: Nortel Swings Axe, Switches CEOs Let the game begin:

12/00 - 95,500
07/01 - 64,500
09/01 - 59,500
10/01 - 45,000

12/01 - 32,000(est, Happy Holiday's)
03/02 - 21,500(est, March Madness)
06/02 - 10,000(est, All HR and VP's)
08/02 - 0 (est, Frank turns out the lights)

Any other guesses?
_____ 12/4/2012 | 7:47:17 PM
re: Nortel Swings Axe, Switches CEOs They had 5 groups and are cutting 2, voice and core internet, leaving them with 3.

DOES THIS MEAN THEY ARE KILLING (TURBO)PASSPORT? -I think this was the flagship core internet product.
tjs 12/4/2012 | 7:47:17 PM
re: Nortel Swings Axe, Switches CEOs When my company was purchased by NT Roth came down to give us all the big pep talk, and we where all very impressed (especially next to that loser House).

Now, times look tough and he sneaks out the back door. and leaves the company in the hands of a @#&! bean counter. I hope the board clarifies that he is "acting CEO" ASAP.

People WILL remember years from now that when things where bad Chambers stood tall (and took no bonus) and you cut and ran just like Dave House and Bill Hawe. I just hope you didn't short the stock recently.
dodo 12/4/2012 | 7:47:17 PM
re: Nortel Swings Axe, Switches CEOs And the Board of Directors would come out from their lethargy and says: "Hey where are our freebies- no more options , no more free flights to offsite BOD meetings"

Yo Franky, old Chap what happened?
optblues 12/4/2012 | 7:47:16 PM
re: Nortel Swings Axe, Switches CEOs You might consider me an outsider into Nortel. I was in a company acquired by Nortel not too, too long ago and dragged in what I would call a big mess. Before my entrance in Nortel, I, like most unknowing people, considered the management team at Nortel to be very competent and graceful in their decisions leading up to the dominance of the 10G market. Through my countless, exhausting conference calls and conversations since joining the company, I have come up with the following synopsis:

1. The management team was very luck to have the best engineering team in the industry when 10G was introduced. I think the engineering team had 90% or more to do with the product success- not the top management.
2. The top management did little to keep the top engineering talents around. In fact, you can see the start of the development decline when the 10G pioneers left the building. Just night and day. The invincible ego was way too powerful at this time. Instead of listening to customers, the product management and other groups started to TELL customers what they were going to get. This did not fly very well, as it turns out that the too late HDX and 40G were far from what the customer wanted.
3. The leadership team systematically destroyed the company by spreading all it's resources too thin. The company exploded right in front of their eyes with little control of the core business in mind.
4. Top management failed to save a dime of cash during their record years of optical sales. In stead, all the now precious cash was wasted on useless expansion of the company. I would not even begin to know where all the money went.

Now.. Now! NOW!! I cannot begin to express my huge disappointment with the statements made this afternoon by Frank Dunn, the new CEO. I strongly believe he is old-school and cannot drive a sorely beaten company back to productivity without some outside influence (at least something!). The Board Members decision to keep Nortel within the same circle of GÇ£friendsGÇ¥ is reason enough for me to really disbelieve in the future of the company.
77thlightguy 12/4/2012 | 7:47:13 PM
re: Nortel Swings Axe, Switches CEOs What a complete disaster! This is BOD sponsored terrorism! NT will crumble by 8/02! I would wager all the BOD relatives took shorts a couple of days ago...

Sorry, I realize the sensitivities, but geeze louise, one could not have scripted a worse series of appointments. Yes, changes needed to be made. Conclusion: they could not sucker anyone good up there to fix it, so they are going to sell it.

The only thing these guys are good at is being bad!

And I do not even want to guess what these guys' severance packages look like...


opticguy 12/4/2012 | 7:47:13 PM
re: Nortel Swings Axe, Switches CEOs Actually, Ottawa Citizen reported 20,000 jobs
will be cut this round, NOT 10,000. I'm glad
I dumped all my NT stock last year !!!!!

What happen to the passport, DMS 100, global server group ?


opticguy 12/4/2012 | 7:47:13 PM
re: Nortel Swings Axe, Switches CEOs Put the bean counter to the CEO seat is ... a
big joke. We will see a big short volume tomorrow morning. Is that what they call increasing the
share holder values ? I think most of the 10,000
layoff will come from Ottawa with 35%-45% of the
total, any guess !!!!

John, what happens to your "right angle turn" ? Are we suppose to make 4 turns or just three ?
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