today fired president and CEO Frank Dunn amid ongoing questions about the company’s accounting.
The Toronto communications equipment giant also dismissed CFO Douglas Beatty and controller Michael Gollogly, both of whom had been on paid leave since last month.
“The actions announced today are about accountability for our financial reporting and are in the best interests of the company and all of its stakeholders, including our investors, customers and employees,” Nortel Chairman Lynton Wilson said in a statement.
The announcements follow an independent review begun by Nortel’s audit committee on the circumstances that forced the company to restate financial statements for 2000, 2001, 2002 and the first and second quarters of 2003.
Nortel replaced Dunn with William Owens, who has sat on the company’s board since early 2002. Until accepting Nortel’s top job, Owens was CEO of satellite communications company Teledesic. Before that, he was CEO of Science Applications International Corp.
Owens has a military background. He was vice chairman of the U.S. Joint Chiefs of Staff under Colin Powell and served as Commander of the U.S. Sixth Fleet during Operation Desert Storm.
The company also said that the interim appointments of William Kerr as CFO and MaryAnne Pahapill as controller have been made permanent.
The total damage to Nortel and the full extent to which the company will need to further adjust its financial reports is still unknown. The audit committee believes full-year results for 2003 will need to be revised, as will all quarterly reports in 2003, 2002 and 2001.
Despite that, Nortel does not expect there to be any “material impact” on the company’s cash balance as of Dec. 31, 2003. In mid-morning trading Toronto-based Nortel’s NYSE traded stock plunged $1.58, or 28 percent, to $4.06 per share.
In terms of orders, Nortel had a good first quarter, making notable gains in numerous telecom sectors, including VoIP, with a large win from Verizon.
Dunn’s dismissal comes one week after the ouster of Computer Associates
CEO Sanjay Kumar, who was at the helm last year during one of the biggest financial scandals of 2003.
CA said the changes were not based on the conclusion that Kumar engaged in any wrongdoing. “Nonetheless, the conduct in question occurred during his tenure, and the board felt this action was appropriate,” company officials said.