Nortel Networks said today its chief executive will step down immediately and its board will shrink from nine directors to just three as the bankrupt telecom equipment maker sheds major assets.
Nortel, once North America's biggest maker of telephone equipment, also posted a bigger quarterly loss due to big reorganisation costs and plunging sales, which it blamed on the weak economy.
The departure of CEO Mike Zafirovski had been expected for some time since Nortel filed for court protection from creditors at the start of this year.
The three remaining directors are John MacNaughton, Jalynn Bennett, and David Richardson, who will serve as chairman, Toronto-based Nortel said.
No replacement was announced for Mr Zafirovski, although the company will seek court approval for its monitor, Ernst & Young, to take a bigger role in overseeing its business. As well, it will ask for US court approval to appoint a "principal officer," it said.
Mr Zafirovski joined Nortel in late 2005 after holding the post of president and chief operating officer at Motorola. Many investors and analysts had hoped he could accomplish what no other executive in the past decade could: turn Nortel into a consistently profitable and stable company.
Instead, Nortel filed for protection from creditors in January, blaming the recession for derailing its turnaround efforts.
It has since started selling its major business lines, including a recent $1.13 billion deal to sell wireless assets to Sweden's Ericsson.
Nortel's enterprise unit is also up for sale and has received a $475 million "stalking horse" bid from Avaya, though higher offers may emerge.
Nortel said today that it lost $274 million, or 55 cents a share, in the second quarter. That was worse than the loss of $113 million, or 23 cents a share, in the year-before quarter.
Nortel said the quarter's loss included reorganization costs of $130 million.
Revenue fell 25 per cent to $1.97 billion, "primarily a result of the continuing economic downturn and the uncertainty created by the creditor protection proceedings," the company said.
Every one of its main business segments posted revenue declines of at least 20 per cent year over year, Nortel said.
Reuters