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.