TORONTO ( TheStreet) -- Mike Zafirovski, the CEO of Nortel Networks ( NT), is stepping down, having reached a "logical departure point" with the beleaguered telecom equipment maker. Zafirovski's departure follows a turbulent few months that saw the company enter Chapter 11 bankruptcy and begin carving off its assets. Nortel announced plans to liquidate earlier in the summer, spelling the beginning of the end for the 127-year-old company. In a statement released Monday, the Canadian company confirmed Zafirovski's immediate departure as well as announcing that the company's board will be reduced from nine members to three. The news is not exactly out of the blue. Last week. Zafirovski told the Ottawa Citizen newspaper that he planned to leave the company soon, adding that he was close to fulfilling his obligation to Nortel. "We've reached a logical departure point," said Harry Peace, chairman of Nortel's board, in a statement released Monday. "Mike 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." Former Motorola ( MOT) executive Zafirovski was parachuted in to save Nortel in 2005, but has presided over its death throes. The CEO recently told Canadian lawmakers that the credit crunch precipitated Nortel's descent into bankruptcy protection, although the firm had been wrestling with plummeting sales well before its Chapter 11. Although undoubtedly dealt a difficult hand when he took over at Nortel, Zafirovski's critics have argued that he should have sold off pieces of the company earlier, avoiding a fire sale.
Zafirovski's supporters, however, say that he performed well in unusually challenging circumstances. "Mike came to Nortel to transform this company," said Peace, in his statement. "He made great progress on many fronts including addressing significant accounting and legal issues; improving the quality of Nortel products and the company's cost structure." The Canadian firm, which competes with Cisco ( CSCO) and Alcatel-Lucent ( ALU), certainly had long-standing problems. Nortel's downfall, for example, was exacerbated by a high-profile accounting scandal and a subsequent cull of senior management, but the firm's failure is also one of bad planning and execution. Nortel also has been heavily criticized for spreading its resources too thinly, as opposed to forging leadership around a specific technology. Now, however, Nortel is focused on carving off its business units, and has announced an enhanced role for Ernst & Young, which has been closely involved in its overhaul. This will include business oversight, sales processes, and other restructuring activities, according to a Nortel statement. In a separate announcement Monday, Nortel also reported its second-quarter results, posting revenue of $1.97 billion, a 25% decline on the same period last year. -- Reported by James Rogers in New York.