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John Roth has taken



free-fall hard.

So hard, in fact, that the former CEO dumped the last of his Nortel stock last month. That in itself is bad news for a company that has been losing money and cutting jobs at such a clip that it's now barely a third of its size two years ago.

But what's stunning for Nortel investors is that Roth, who made tens of millions of dollars by exercising stock options when Nortel was at its peak in the summer of 2000, sold the stock for what counts as peanuts in the age of Lay, Ebbers and Kozlowski: less than $1 million.

"When you sell something at C$1.55, it's not a rational decision," said Roth, who led the Canadian telecom gearmaker to a remarkable stock market round trip before stepping down in April. "It was heartbreaking to watch this poor company go through a terrible spiral," Roth said by telephone from his Ontario estate.

Bad Market

According to a report by the Ontario Securities Commission Friday, Roth sold 751,245 shares of Nortel stock last month for roughly $744,260. That means he sold for less than $1 a share; the stock traded north of $80 in the summer of 2000 amid the Internet building boom for telecom gear stocks.

The executive said he made the move for personal reasons and because the market was bad. And he pooh-poohed the notion that his decisions should reflect negatively on the stock, though investors often fear that sales by insiders or near-insiders portend bad news.

"The whole market was bad, so I just sold everything I had -- all my equities including Nortel," said Roth, who left Nortel with roughly $86.3 million in gains on stock options he exercised during the market's peak in the summer of 2000. He declined to name other stocks he may have sold.

Nortel wouldn't speculate about the move's implications for its stock. "We¿will not comment on Mr. Roth's personal financial arrangements or portfolio adjustments," said Nortel spokesman David Chamberlin.

Odd Timing?

Nonetheless, Nortel's downward spiral continues and surely won't be reversed by Roth's decision to sell. Nortel shares have traded as low as 85 cents last month, a level not seen in 20 years, as investors have questioned the viability of the company during a protracted spending slowdown.

To some observers, Roth's oddly timed kick provides an apt final note to the executive's spectacular legacy at Nortel.

Roth, a career Nortel engineer, took credit for positioning the company as a key supplier of optical gear just as telcos were spending record amounts of cash building or overhauling networks. Outfits such as



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were famously double-ordering optical gear to ensure they could have the coveted equipment on hand to build out their vast networks.

In the second quarter of 2000, Nortel boasted a 150% growth rate in optical sales and said it was on track to bring in $10 billion in optical revenues for the year. But a year later, apparently blindsided by a widespread spending slowdown, the company posted a staggering $19.4 billion loss.

Some analysts and investors say Roth's role in Nortel's meteoric rise was largely coincidental. Roth tersely dismissed that.

"We had the product, others didn't," he said.

Cruel Decline

But some say it's not what he created that's in dispute, it's what he destroyed.

Convinced that the extraordinarily high demand for optical gear would be a lasting condition, Roth set out on a costly and ambitious facility-expansion plan to double the company's production capacity.

Roth said that due to pending class-action lawsuits, he was unable to comment on whether that was a wise strategy or not.

In an interview with

on July 25, 2000, just days before the spending boom would

begin its cruel decline, Roth indicated that he would continue to aggressively pursue growth.

"I think we've been very diligent about assuring we don't fall in love with our current portfolio," Roth said at the time. "The biggest threat to companies that become large is that they start to defend their position as opposed to attack their position."

But critics and investors say Roth's inability to see the downturn ahead, combined with his spending campaign, left the company with little to show for all of its recent success.

As for the sale, Roth said it wasn't an act of spite but simply an end to his misery.

"My wife would come home and find me glued to the TV set watching the poor old company go down some more. She said, 'Stop doing that, John.' So having not owned it anymore I don't have to watch it."

There are probably a few Nortel investors who wish they were as fortunate.