Nortel chief set to announce exit

New York: Mike Zafirovski, chief executive of Nortel Networks for the last four years, is close to announcing his departure from the Canadian telecoms equipment maker as it sells off assets under Chapter 11 protection, people familiar with the matter said.

Nortel declined to comment. Zafirovski was not expected to take another position in the short term, the people said.

The former Motorola and GE executive was appointed in 2005 to try to revive equipment sales at a company that was still recovering from an accounting scandal dating back to 1999, which brought the Canadian technology icon to its knees. Zafirovski led its bankruptcy filing in mid-January. However, the global recession derailed his turnround plans. His decision to step down at this stage is said to reflect his belief that he has succeeded in stabilising the company since the filing and that an orderly sale of its assets can now be completed this year. Last month, he argued that an orderly sale would yield "the best results for all stakeholders", in spite of talk of a private equity rescue bid.

He is stepping down following the successful $1.13 billion sale of the bulk of Nortel's profitable wireless unit, which includes the CDMA wireless technology, to Sweden's Ericsson and as preparations for the auction of its other main businesses, including its corporate networking and metro ethernet units, proceed.

Nortel is also planning to sell its stake in LG Nortel, its successful joint venture with Korea's LG Electronics group, and has secured court approval for an auction of its corporate networking business, due to take place on September 11.

Avaya, the US business communications group, has made a $475 million "stalking horse" offer for the networking business, but other bidders may yet enter the battle. After joining Nortel, Zafirovski undertook an extensive restructuring, including substantial job cuts, and refocused research and development spending on new growth opportunities while selling off mature businesses.

However, he concluded that Nortel lacked the scale to compete against global rivals as well as the rising threat from Chinese competitors in a consolidating industry where pricing power had shifted decisively to tele-com operators.