Nortel Networks President and CEO Mike Zafirovski will step down from his post amid the troubled former telecom giant's failed turnaround and its continuing everything-must-go-style assets sale.
Zafirovski's departure is effective as of today. A replacement has not been named.
In addition, Nortel's board of directors will be reduced from nine to three members -- John MacNaughton, Jalynn Bennett and David Richardson, with Richardson serving as chairperson.
Nortel's executive shakeup comes as the company reported a 25 percent drop in second-quarter revenue compared with a year ago, with revenue hitting $1.97 billion. Despite the revenue decline, Nortel pointed out that revenue was up 14 percent sequentially compared with 2009's first quarter. Nortel added that as of June 30, the Toronto-based company had a cash balance of $2.56 billion, up from the $2.48 billion it had as of March 31.
Nortel's Enterprise Solutions business revenue fell 28 percent year over year, while its Carrier Networks revenue dropped 20 percent. Nortel's other businesses, including Metro Ethernet and LGN, were also down year over year.
"We've reached a logical departure point," said Nortel's outgoing board chairman Harry Pearce in a statement, "Mike made a commitment to see the process through the stabilization of the company, sale of its largest assets and the right plans and people to continue operating our business and serving customers. He has done so."
Added Zafirovski: "I am extremely proud to have been associated with this company. The board members and I came to Nortel because we really believed in the value of Nortel's people and technology. Although solid progress was made in many areas, at the end, the capital structure and legacy costs coupled with the economic downturn proved too difficult to surmount."
Zafirovski was tapped as Nortel CEO in 2005, brought aboard to reinvigorate and transform the company like he had done for Motorola's mobile devices unit and a lighting division at General Electric. Zafirovski was unable to right the Nortel ship, which continued to spiral after years of missteps. Since Zafirovski took Nortel's top executive position, however, revenue hit a tailspin and rapidly declined. Nortel ultimately filed for Chapter 11 bankruptcy protection in January.
Months later, Nortel revealed it would sell off the majority of its assets after its restructuring plan went bust. First on the auction block was its CDMA and LTE Access carrier wireless division, which Swedish wireless and mobility giant Ericsson acquired for $1.13 billion, beating out Nokia Siemens Networks in a stalking horse bankruptcy auction.
Nortel's Enterprise Solutions division, which comprises its data networking, VoIP and government solutions offerings, is next up for auction. Currently, Avaya leads the bidding with a $475 million offer for Nortel's enterprise unit. The bankruptcy auction for Nortel's Enterprise Solutions business is scheduled to be held Sept. 11 and all bids are to be received by Sept. 4.