Nortel ( NT) set a new course Monday, naming former Motorola ( MOT) exec Mike Zafirovski as its new chief.
Zafirovski, 51, will replace Bill Owens Nov. 15. The news sent Nortel shares up 15 cents, or 4%, to $3.45 early Monday. Nortel's move to tap a big name in the networking industry is part of a larger effort to get past a lengthy "bonusgate" accounting scandal that led to a shakeup in the company's highest ranks. "There are very few companies that combine Nortel's rich legacy of innovative leadership and customer base with its enviable position in the world's most important and fastest-growing markets," Zafirovski said in a press release Monday. Nortel's Owens, once an admiral in the U.S. Navy, said that it was time for the move and that Zafirovsky was the right man for the job. "At 65, I'm now pleased to turn over this company to a proven leader to drive our success over many years ahead. His proven track record in the global telecom sector and the business world will serve this company, our shareholders and our customers extremely well," Owens said in the press release. Zafirovski had been seen as a leading candidate for the job since he left Motorola early this year. He departed the Schaumburg, Ill., wireless titan after being passed over for the top job there. But Nortel had other plans. The Brampton, Ont., tech giant hired former Cisco ( CSCO) bigwig Gary Daichendt as president and heir-apparent to Owens' CEO job. After three months, however, Daichendt quit, setting the company adrift again.
Nortel looks to be getting back to its core strengths by hiring Zafirovski, who has a strong business background in wireless and networking. Investors were unimpressed with Owens, who was brought in to bring stability to the scandal-rocked company. Owens inherited a chaotic situation, and he became a point man as frustration mounted over Nortel's protracted bookkeeping cleanup. As the accounting morass widened and the company missed numerous filing deadlines, Owens' popularity declined. Like rival Lucent ( LU), Nortel was mired in a rut, unable to find enough new growth areas to lift it out of the declining sales of its older gear.
Even though AT&T tried a last-minute bribe of promising 5,000 new U.S. jobs to help gain support for the deal, the Justice Department filed a complaint to fight the combination of the nation's No. 2 and No. 4 wireless carriers.