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Telecommunications equipment industry

Nortel Networks Parts Ways with Top Executives Amidst Turmoil

Strategic Insights

— 1 min read

Nortel Networks, a beleaguered telecommunications equipment maker, has parted ways with its chief operating officer, Gary Daichendt, and chief technology officer, Gary Kunis, just as the Ontario-based company appeared to be stabilizing. The sudden departure of these two top executives, both with senior positions at Cisco Systems, comes as Nortel is trying to recover from a period of high management turnover and accounting irregularities that forced it to restate its earnings for 2001-2003.

Key Takeaways:

  • Nortel Networks has parted ways with its chief operating officer, Gary Daichendt, and chief technology officer, Gary Kunis, just three months after Daichendt joined the company.
  • Daichendt and Kunis had held senior positions at Cisco Systems, an arch-rival of Nortel, and had been instrumental in implementing a long-term business plan for the company.
  • The departure of the two executives comes amidst a period of high management turnover, with Nortel's fourth chief executive in less than a decade, Bill Owens, being at the helm.
  • Owens, a former US admiral and vice-chairman of the Joint Chiefs of Staff, has developed a long-term business plan for Nortel, which includes acquiring PEC Solutions of Virginia, a company that specializes in defense, intelligence, and homeland security work.
  • Outsiders had expected Daichendt's top priority to be bolstering Nortel's corporate and phone carrier business, but instead, he focused on the acquisition of PEC Solutions, which has raised eyebrows.

Statistics:

  • Nortel shares tumbled 8% to close at $2.58 in New York.
  • The company released results for the first quarter of 2004, showing a $49m loss but a 4% rise in revenues compared with a year earlier.
  • Nortel has been plagued by high management turnover, with ten executives, including the chief executive, chief financial officer, and controller, being dismissed last year following the discovery of accounting irregularities.

Sources:

  • BERNARD SIMON TORONTO -- Nortel Networks said yesterday...
  • Argus Research, Jim Kelleher
  • Nortel Networks
  • Cisco Systems

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