Dying Nortel's CEO steps down, board trimmed

The final curtain fell on dying Nortel Monday when its president and CEO Mike Zafirovski stepped down even as the company trimmed its board of directors from nine to three.

In another announcement, the 124-year-old Canadian tech giant reported a 25 percent fall in its second-quarter revenue from the same period last year, doubling its losses to $274 million.

After suffering losses of $5 billion last year and then undergoing bankruptcy protection in Canada and the US in January, Toronto-based Nortel announced last month to wind itself up by selling its various businesses to pay off creditors. It sold its next-generation wireless business to Ericsson for $1.13 billion in a court-supervised auction in New York last month - a move contested by BlackBerry maker as against "national interest".

Zafirovski, who took over as CEO in 2005 after an accounting scandal, said: "I am extremely proud to have been associated with this company.

"The board members and I came to Nortel because we really believed in the value of Nortel's people and technology. Although solid progress was made in many areas, at the end, the capital structure and legacy costs coupled with the economic downturn proved too difficult to surmount."

Zafirovski, an American who joined Nortel from Motorola, said: "We have taken many steps. We have completed the organizational moves of Nortel's businesses to vertically integrated, stand-alone business units, and on June 19th, we announced that we would work to maximize value through the sale of these businesses."

The dying Nortel will now have a three-member board comprising John A. MacNaughton, Jalynn H. Bennett and David Richardson, with Richardson serving as the new chairman.

Outgoing chairman Harry Pearce said: "We have reached a logical departure point. Mike (the outgoing CEO) made a commitment to see the process through the stabilization of the company, sale of its largest assets and the right plans and people to continue operating our business and serving customers. He has done so."

A Canadian corporate giant, Nortel accounted for almost one third of the total valuation of all the companies listed on the Toronto Stock Exchange (TSX) till the dotcom bust of 2000 did it in. Its market capitalization plummeted from almost $400 billion just before the dotcom bust in September 2000 to $5 billion within two years as its stock sank from $124 to $0.47.

Then came the accounting scandal of 2004 which left its reputation in tatters. In 2006, the telecom giant had to shell out $2.5 billion to settle shareholder class actions.

When the global economic crisis hit last year, Nortel was already in very bad financial shape. As markets shrank and credit avenues dried up, the company sank deeper.

Bankruptcy protection was its last option to survive, but it too failed to save it.

Ericsson also bidding for Nortel's wireless business

Sweden's Ericsson has entered the bid to acquire the next-generation wireless business of Nortel.

Toronto-based Nortel, which is selling its various divisions as part of its liquidation plan, will auction its wireless business Friday in New York.

Till now, Nokia Siemens Networks and America's MatlinPatterson Global Opportunities Partners were the two bidders, with Canada's BlackBerry maker Research In Motion (RIM) shut out because of its refusal to sign non-disclosure agreements with Nortel.

The BlackBerry maker has said it is ready to offer $1.1 billion to Nortel for its wireless unit, much higher than Nokia Siemens's starting offer of $650 million and MatlinPatterson's $725 million.

Confirming that it is bidding for Nortel's wireless business, the Swedish telecom giant refused to say how much it is offering to Nortel.

However, reports here put Ericsson's offer at $730 million, making it the highest bidder.

"We will pursue the opportunity to the point that it makes sense,'' Ericsson spokesperson Kathy Egan told the Canadian Press.

"It's an interesting opportunity and we're always looking for ways to create value for Ericsson,'' she said.

Ericsson, which has been a long-time rival to Nortel in the global market as a supplier to phone companies, has a research and development centre in Montreal.

Nortel has not revealed the names of any other bidders for the court-supervised auction Friday. The 127-year-old Nortel, which was once the global telecom equipment maker giant, has been operating under bankruptcy protection since January after posting a $5-billion loss last year.

Nortel to shut down, sells wireless business to Nokia

Toronto-headquartered Nortel, which is under bankruptcy protection in both the US and Canada, has announced that it will liquidate itself.

In a statement issued Friday, the 127-year-old Canadian telecom equipment giant said it has entered into a deal with Nokia Siemens to sell its wireless business for $650 million.

"This (sale) will ensure Nortel's strong assets - technologies, customer relationships and employees - continue to play an important role in driving the future of communications. The value of Nortel's wireless business is recognised throughout the industry," said Nortel president and chief executive Mike Zafirovski.

"The agreement we are announcing today is solid proof of that value and represents the best path forward for our other businesses," he added.

Once the biggest maker of telecom equipment and Canada's most valuable company, Nortel said it was in advanced stages of discussions with other parties to sell its other businesses.

"Maximising the value of our businesses in the face of a consolidating global market has been our most critical priority. We have determined the best way to do this is to find buyers for our businesses who can carry Nortel innovation forward, while preserving employment to the greatest extent possible," said Zafirovski.

Nortel, which once accounted for the bulk of the Toronto Stock Exchange (TSX), said it was delisting from the stock market.

"Trading in such shares on the TSX is expected to be suspended pending the TSX's decision on the delisting application," the statement said.

Nortel, which has been in business making telephones and later telecom technology since 1882, had to file for bankruptcy after suffering losses to the tune of $5 billion last year.

Even as its top bosses restructured the company and cut jobs, Nortel posted a further loss of $507 million in the first quarter ending March 31.

The telecom giant's accumulated problems - from the bubble burst to internal accounting scandal to the current meltdown - forced it to seek bankruptcy protection in the US and Canada this January.

Its bankruptcy plea was accepted ahead of its $107 million interest payment in January.

The telecom giant had announced last month to sell its majority stake in LG-Nortel, which it formed with Korea's LG Electronics in 2005.

Nortel, which once employed 90,000 people worldwide, has about 30,000 employees now.

But under the deal with Nokia-Siemens, 2,500 of its employees will stay with the new company.