RealTime IT News

A Leaner Nortel

LAS VEGAS -- Nortel CEO Mike Zafirovski said the networking company would look to exit businesses where it can't gain at least a 20 percent market share.

Zafirovski didn't specify which businesses these might be.

But the CEO spoke candidly to the press at the CTIA Wireless conference, acknowledging the company's poor financial performance for the last several years.

Zafirovski, in a rare public speaking appearance outside earnings calls, said Nortel hasn't had a good, balanced financial position since 1998.

"Our ability to execute has been excellent in some places, but overall, average to below average," Zafirovski said. "We're too complex to operate as a company. We tried to be too many things to too many people. As a result, we're not as strong as we'd like to be in a number of areas."

Nortel is scrutinizing its own business in the wake of some shaky accounting.

Last month, the company said it will restate 2003 to 2005 results and some earlier results after an ongoing review turned up instances where revenue was recognized sooner than it should have been.

Zafirovski said six teams within the company are looking at ways to execute a "business transformation," and said he is looking to hire a chief marketing officer, a chief technical officer and a couple of presidents.

He said the company is looking to expand its operating margin by $1.5 billion by 2009 and improve the balance sheet through stronger corporate governance.

"This used to be a great company," Zafirovski said. "It can be a great company again."

Zafirovski, who joined Nortel from Motorola last October, said Nortel would look to strengthen its "innovation DNA," through its successful technology businesses, such as gear for VoIP , IP Multimedia Subsystems (IMS) and WiMax.

He said the company would look to shed businesses where it couldn't gain at least a 20 percent market share organically, or with the help of partners over the next three to five years. Such businesses currently account for 65 percent of Nortel's revenues, he said.

The company has already made good on one of these vows.

In February, it sold its Blade Network Technologies business to Garnett & Helfrich Capital. IBM, HP and Sun Microsystems dominate the blade market for telecommunications companies.

Zafirovski also said the Alcatel-Lucent merger is "great, positive" news for the industry and for Nortel as well, noting that it wouldn't change the way Nortel does business.

He said he considers Cisco Systems and Ericsson the primary threats.