Nortel Monday announced that CEO Bill Owens will leave the company in
mid-November to be replaced by Motorola President and COO Mark
Owens’ departure comes as a surprise given that the 65-year-old ex-vice
chairman of the Joint Chiefs of Staff gave every indication he intended
to remain CEO after leading Nortel through its financial scandal and
refocusing the company on its enterprise operations. Owens became CEO
after Nortel fired then-CEO Frank Dunn in April 2004 for cause after
determining he helped orchestrate Nortel’s bogus accounting that forced
the company to restate years of earnings.
Indeed, speculation has it that Owens’ determination to remain CEO
prompted the abrupt resignation of COO Gary Daichendt in June after
only three months at the company. Daichendt, an ex-Cisco sales
executive, and CTO Gary Kunis, another ex-Cisco executive, were brought
on to help inject some Cisco enterprise expertise into the
Nortel just completed another reorganization that places even more emphasis on the enterprise.
Speculation now has it that Owens’ steadfastness may have cost him his own job.
“It makes you wonder what really went down with ex-COO Gary Daichendt,
who apparently quit in May because he wanted to be CEO but Owens and/or
the board showed no sign it was going to happen any time soon,” wrote
Canada’s National Post technology reporter Mark Evans in his blog. “In
a nutshell, Owens’ departure — was he fired, pushed or did he resign?
— is another one step forward, two steps back move for Nortel, which
has now had three CEOs in the past 18 months.”
In a statement, Nortel Chairman Harry Pearce thanked Owens for his
contributions. Pearce himself is new Nortel blood, having been named
chairman shortly after Daichendt and Kunis departed.
“At a moment of great challenge and enormous need in the history of
this company, the Board turned to one of its own, whose long career
embodied the highest levels of trust, integrity and distinguished
leadership,” Pearce said. “We needed an experienced, steady hand and
Bill delivered. On behalf of our Board, our employees, investors,
partners and customers, we will be forever grateful.”
“Bill re-established stability within Nortel and credibility with all
its stakeholders. He guided the company in becoming current in its
financial reporting and maintained the loyalty of our customers. Mike
can now build for the future on the strong foundation Bill Owens has
given us,” Pearce said.
Owens, in a statement, said: “As Nortel has said over the past many
months ’We are Playing to Win’ and Mike’s coming on board is a most
important step along that path. His proven track record in the global
telecom sector and the business world will serve this company, our
shareholders and our customers extremely well. I’m proud to have him
take the helm.
“We are proud of and pleased with our achievements over the past 19
months,” Owens stated. “We are on a very stable, solid footing, with a
rebuilt and strong senior management team, are back to regular
financial reporting, and are growing business in some of the most
important markets in the world. The employees, customers and partners
of this great company are world class and I am deeply grateful for
their support and dedication. At 65, I’m now pleased to turn over this
company to a proven leader to drive our success over many years ahead.”
Zafirovski, 51, has a 30-year career of leadership with two of the
world’s highest-profile corporations, General Electric and Motorola.
From 1975 to 2000, Zafirovski served with General Electric in a
succession of senior executive positions, in a number of the company’s
key divisions: president and CEO, GE Lighting; president, GE Capital
Mortgage Corp.; and president and CEO, GE Capital Fleet Services. In
2000, Zafirovski joined Motorola, first as president and CEO of the
Personal Communications Sector, and from 2002 to 2005, as president and
chief operating officer of Motorola.
“Mike Zafirovski has the kind of proven, team-building leadership that
has seen him create significant new value during his career in two of
the world’s most important global corporations,” stated Pearce. “He’s
the right leader to build on the important work of Bill Owens – and
take Nortel to the next level.”
Analysts are upbeat on the change.
“Zafirovski is well respected by the street, and seen as a competent
manager in the telecom industry,” wrote UBS Warburg Analyst Nikos
Theodosopoulos in a bulletin. “We note that Nortel has been in need of
telecom and operational experience in the top role.”
“While Mr. Owens deserves praise for stepping into a very tough role
after the firing of CEO Frank Dunn, we had been increasingly concerned
about strategic drift at Nortel,” wrote CIBC World Markets Analyst
Steve Kamman in a bulletin to investors. “In addition, he failed to
deliver on a promise for greater transparency in financial reporting.
We are very happy to see ’Mike Z’ take over. He is very well regarded
as a very strong operational manager. We believe he has the perspective
needed to focus Nortel’s strategy. More importantly, he has the
guts/drive/stamina to clean house and actually implement it.”
By Jim Duffy – Network World (US online)