Nortel's New CEO Talks the Talk
If
first impressions
count for anything, new Nortel CEO Mike Zafirovski made it clear he has
a strong handle on what needs to be done to resuscitate Canada's
flagship high-tech company. At a press conference earlier today,
Zafirovski was asked a softball question: “what do you see as Nortel's
biggest priorities and opportunities”. Rather than dance around
the question with something like “Well, I've got to spend some time
talking to our people, blah, blah, blah”, Zafirovski quickly snapped
off six
points. This includes improving profit margins, making sure R&D
spending is well focused, and the creation of a clear strategic
direction. It was enough to make the hearts of financial analysts
flutter with
excitement! While Zafirovski steps into the spotlight, it was difficult
not to get the impression that ex-CEO Bill Owens was less than happy
about leaving the scene. Nortel denied they asked him to step aside but
it was clear Owens best-until date had expired and he probably saw the
writing on the wall. Given the reported troubles between Owens and COO
Gary Daichendt, who resigned after less than three months on the job,
it was interesting that Zafirovski made it clear he has no interest in
having a COO. I get the feeling Zafirovski has been given complete
control over operations by Nortel's board, which is the price you have
to pay to attract world-class talent. It will be very interesting to
see how much Nortel had to pay to convince for the privledge.
October 17th, 2005 at 10:28 pm
Nothing has changed, the market is duped making this postgrad Owens a scapegoat and this undergrad Zafirovski a hero the way I see things…
Did Zafirovski soley truly dictate success and was he truly responsible for Motorola's turnaround or was he at the right place at the right time like a lousey salesman with a golden territiory. Are his abilities anywhere near Owens'. Zafirovski having spent 24 years at GE, is a very long time and most employers stigmatize this as stagnant .
Furthermore, Mike Zafirovski resigned as president and COO of Motorola, a year after being passed over for the top job at the group.” Why didn't Motorola want him if he was that hot?
The way I see it it, this Nortel rally to this news of him becoming CEO was market blindless and over-opportunitic response to really bad news in that Owens suddenly left too. Its just more forever ongoing bad news dressed up as good news, like their Q204's higher revenue from asset sales/past receivables/paying customers more/ losing opertations to battle the horror of decling revenues even at the expense of lower margins. In 2004, this was the worst year since the mid 1990's where they at least they made $75 million in the first half, in 2005 they lost 4 million which is worst still, some great financials eh?… What masters of delay and deceit.. what credibility… transparency… BSNL was an expensive lesson too now that they are tendering a $5 billion order, 10 times their $500M order that lost $200M, to lower priced competitors. Seems they are following British Telecom's, Cingular's, BMO's, etc., lead in that no one wants anything to do with NT using anyone but them…
Nothing has changed at Nortel for the better with fundamentals, orders, cash, lawsuits… Too much hoopla like Mike had anything to do with turning Motorola around. Motorola would have done well no matter who was COO during that period and they are still doing comparatively well.
Do you think Mikey can take the ongoing politics, turmoil, and code red pressures as well as Bil Owens has? I wonder if his communications skills will also play an important role as NT's new figurehead/spokesperson. Gary sure as heck doesn't miss the politics and Mikey has no idea what they are about to face here soon. I wonder if he is optimsitic about refinancing and settling the lawsuits too… like anyone finances unreliable losing numbers with undefined fines and settlement amounts… and how can they ever pay the billions in fraud damages losing money is beyond me… I agree in thast “they are on borrowed time”. “toast”… regarless of who is there… and Owens was by far better…
Who really knows what suddenly arises with all these sudden departures lately of Malcolm Collins head of enterprise that NT is remaining mute about, this so called sudden retirement and golden parachute for Deroma, the Garys, now Owens, what the heck is going on… They arn't exactly reknown for their ethics, disclosure, and even their restated restatement is still unreliable according to their auditors. Moodys credit also maintains a negative outlook. I wonder what they would say with the ventures failing and being bumped out of Putian now with Noika in there.
Their woes are endless, nothing has really changed:
-billions to pay for this admitted fraud of $200M bonuses (company/shareholders pay not them)
-cash $3 billion if that now
-closing almost 70% of R&D that employs 12,000, close campuses, severences
-poor Wireless outlook, Cingular went elsewhere
-shut out of a $19 Billion British Telecom tender
-NT lost $200M on $500M gamble with BSNL
-BSNL now a lost leader, tendering 5 billion to lower priced competitors
-Everyone is using anyone but them like BT, Cingular, Sprint, BSNL, etc.,
-Asian gambles failing, no “substantial returns”
-Putian History now, Noiks in, NT out (field trials only)
-LG down 70% earnings last quarter, Korea no “substantial returns”
-PEC acquisition gamble failing, Flex still delayed another year, no “substantial returns”
-NT paid a $448M premium for PEC's declining 15M in profits/earnings since 2002
-Flex still delayed another year and now not taking it all as Monkstown Ireland excluded
-still unreliable numbers with ongoing weak internal controls
-Telecom-equipment market grew by more than 5% in 2004. Industry wireless sales rose double digits that year but at Nortel, they dropped by 7%
-For the full year 2004, Nortel lost $51 million- the worst sales since the mid-90s.
-They made 75 million Q1/2 2004, this year they lost 4 million
-Q3 is forecast lower than Q2
-all good businesd halt Q304, 12 month ship cycle catches up Q305
-its largest business wireless, Lucent, Ericsson,and Motorola winning market share
-in enterprise market, Cisco jump-starts dominance with key acquisitions.
-Ericsson, Huawei, Alcatel, et. al. are growing faster
-Nortel is not as cost competitive as Ericsson and Nokia let alone Huawei
-Owens, Collins, Deroma, Deichendt, dream team board, …poof gone
-fixed AGM votes to keep bonus structure like cooking $3.1 Billion, guys leaving now
-Currie and Pusey insiders still getting bonuses
-debt repayment time coming fast, solvency/liquidity crisis quickly approaching
-criminal investigation results/charges anticipated soon
-same people are still there Owens claims are difficult to find
-still dress losing operations with asset sales and past receivables for increased revenues
-lack total credibility and transparency/disclosure with ambiguities and consistent contradictions
-never reach a point of profitability because the ongoing downsizing costs
-Moodys credit warns of insolvency
-no refunds, “risks&uncertainties” encompassed half their annual report
-etc., etc., etc., etc., etc., etc.,
As for the here and now in ongoing events, BAD NEWS DRESSED AS GOOD NEWS, it appears clear to me that they remain jinxed and still can't do anything right.
Here, just compare Mike Zafirovski to William Owens, god knows how much even worst things would have been with Mike. And this like Q2 was interpreted as good news, is the market nuts?
Mike Zafirovski:
COO of Motorola
Edinboro University
Just imagine the challenges Mike Zafirovski, president and Chief Operating Officer of Motorola, faced when he immigrated to the United States in 1969 without knowing a word of English. Just two years after leaving Macedonia, he began his studies at Edinboro University on a swim scholarship. Upon graduating with a bachelorÂ’s degree in Mathematics, Zafirovski went to work at General Electric. Over the next 24 years, his leadership abilities were recognized with a series of increasingly more senior positions around the globe. In June 2002, he joined Motorola and has led the company in its efforts to increase market share and return to profitability.
Over the years, Zafirovski has not forgotten his roots. “Giving back to the community is a top objective that is only limited by your imagination and your heart,” says Zafirovski. Over the years, he has consistently supported the university and provided opportunities for students to emulate his achievements. Recognizing these efforts, the university presented Zafirovski with an Honorary Doctorate in Public Service.
William Owens:
Owens has written more than 50 articles on national security and authored several books. He is a 1962 graduate of the U.S. Naval Academy with a bachelor's degree in mathematics. He holds bachelor's and master's degrees in politics, philosophy and economics from Oxford University and a master's degree in management from George Washington University
Owens is the founder of Extend America, a five year state wireless telecommunications venture. He is also a member of the Canadian Council of Chief Executives.
On December 1, 2004, Bill Owens received the Intrepid Salute Award in recognition of his business achievements and support of important philanthropic activities. Owens was also recognized as one of The 50 Most Powerful People In Networking in 2004 by Network World,
one of the industry's premier publications.
Prior to joining Nortel in 2004, Owens was chief executive officer and chairman of Teledesic LLC and president, chief operating officer and vice chairman of Science Applications International Corporation (SAIC), the U.S.'s largest employee-owned high-technology company.
Prior to joining SAIC, Owens was vice chairman of the Joint Chiefs of Staff, and the second-ranking military officer in the United States.
Owens was the architect of the Revolution in Military Affairs (RMA), an advanced systems technology approach to military operations that is the most significant change in the system of requirements, budgets and technology for the four armed forces since World War II.
See why the market was too quick to make Owens as the scapegoat. He is exponentially better qualified than Zafirovski from what I can see. Once then, since when has Nortanic done anything right lately with lost ventures, cash, credbility, business, margins, etc… as they finance themselves to zero.
October 18th, 2005 at 1:15 pm
Bill Owens said he's only known Mike for a “few days”. Given Owen's role in Daichendt's departure the board may have decided not to include Owens in the succession process this time.