Nortel Suspends CFO Douglas Beatty

The suspensions come after Nortel last week said it was likely to again restate results for 2003, and possibly earlier periods as well.

In midday trading, shares of Nortel dropped 75 cents, or 12 percent, to $5.68 on the New York Stock Exchange.

In December, the Brampton, Ontario company restated results for 2000 through the first two quarters of 2003 due to $900 million in liabilities that were either recorded incorrectly or not properly released in the appropriate periods.

William Kerr will be interim chief financial officer while Douglas Beatty is on leave, and MaryAnne Pahapill will temporarily replace Michael Gollogly as controller, the company said.

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Nortel spokeswoman Tina Warren declined to make Beatty available for comment or say why he and the controller were being put on leave now rather than when the first restatements were announced.

Nortel was criticized last week for not providing more details about the potential effect of future restatements. The lack of information in the latest release doesn't help the situation, observers said.

"The news release this morning would suggest that perhaps there is something more material going on here," said Paul Holman, an analyst at Domininion Bond Rating Service.

Last week, DBRS placed Nortel's debt on review with negative implications, and that hasn't changed, Holman said.

Nortel, one of North America's leading makers of telecommunications gear, had 2003 revenue of $9.81 billion.