LAS VEGAS—When asked during an interview with RCR Wireless News what drew him to take the top job at Nortel Networks, CEO Mike Zafirovski said, “I love business, and this is the closest thing to sports for me. I am very fortunate to have worked with two great companies—GE and Motorola, both heroes of the 20th century. Nortel is also a great company, an icon really. It’s been impaired, but it’s got great assets, namely its people and its great innovation, its DNA.”
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Zafirovski’s plans to re-energize and transform Nortel into a profit-producing company by 2008 centers on getting the right people into the right positions and investing in the right technologies.
As far as investing in employees, Zafirovski says the company is implementing measures to ensure that a high level of integrity is maintained among the company’s workforce. Just last month, he said a number of employees were dismissed because they didn’t measure up to the company’s standards. Since 1999, Nortel has shown the door to more than two-thirds of its work force. Zafirovski has infused the executive-level management team with comrades from his former employers, General Electric Co. Ltd. and Motorola Inc.
For the remaining Nortel employees, Zafirovski says he’s serious about listening to their concerns. So much so that he has taken the time to meet with all of his teams to hear what the employees have to say. Though he has only been leading Nortel for five months, Zafirovski said new policies have already been instituted to support strong ethics and moral integrity among the employees.
Technologically speaking, Zafirovski said the company plans to narrow its focus to concentrate on technology areas where it has a chance to dominate with at least a 20-percent market share. Today Nortel is No. 1 or No. 2 in only five out of the 22 communications equipment market segments where it competes, he noted.
At this point, Zafirovski divulged that Nortel is going to focus on WiMAX, IMS and IPTV.
“We’re very focused on WiMAX. We’re spending lots of time and effort to influence standards bodies and we’re committed to make investments. We have the No. 1 position in VoIP, and we have the most open IMS solution with deployment experience all around the world.”
And what about mergers and acquisitions? Zafirovski said Nortel has been in regular discussions with companies it sees as having good partnership possibilities and will continue to do so. Nortel’s joint venture with LG Electronics Co. Ltd. is paying off nicely since the two companies hooked up to form LG Nortel Co., a joint venture for wireless infrastructure in which Nortel owns a controlling interest. The strategy gave Nortel an inroad into South Korea and gave LG access to the rest of the world. Nortel says it is now No. 1 in South Korea, with a 50-percent market share in UMTS in Korea, which has the highest penetration of third-generation subscribers in the world.
In another partnership arrangement, Nortel teamed with IBM Corp. last year to collaborate on the design and development of new products and services joining Nortel’s communications expertise with IBM’s server experience. The companies are addressing VoIP, IMS and other broadband wireless technologies.
Zafirovski said he expects Nortel’s transformation to take three to five years, and noted that hard decisions lie ahead.
“You can’t be a market leader without a strong foundation, and that’s what we’re focusing on. It’s not sexy, but it has to be done. Many important decisions will be made in 2006.”
Financially, Nortel hasn’t been able to catch a break. Recently, current and former directors, officers and employees of Nortel were forbidden by the Ontario Securities Commission to trade shares of the company’s stock. The cease-trade order came as a result of the company’s delay in filing its 2005 annual reports and corresponding Canadian filings, which the company announced March 10.
The company has restated its financials three times within three years and says it will post its 2005 earnings by the end of April.