Sending Signals? Nortel CFO to Become CEO

The telecom giant hires from inside -- and some investors read between the lines.
Lisa YoonOctober 10, 2001
  • Frank Dunn was appointed CEO of Canadian telecom giant Nortel Networks Corp. last week. On November 1 CFO Dunn will succeed John Roth, who will become vice chairman until the end of 2002. The appointment caps off Dunn’s 25 years with the company, the last five of which saw Nortel grow into a giant serving almost half the world’s market for optical-transmission and other telecom equipment.

    Of course, things aren’t so hot right now. Industry rival Lucent Technologies Inc., trying to stage a comeback from its own problems, has overtaken Nortel in market share, at 21 percent compared with Nortel’s 17 percent. Earlier this month Nortel announced that it is cutting 20,000 additional jobs, bringing its workforce down to about 45,000 from the 95,000 with which the company started the year. That’s not all: Nortel is also writing off $750 million in inventory and another $750 million in trade receivables and customer financing.

    All this good news has resulted in a spate of analyst downgrades from the likes of Lehman, Salomon Smith Barney, Banc of America, and TD Securities. Oh, and Moody’s says Nortel paper could be on the verge of junk status.

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    If inheriting a struggling behemoth didn’t make for a full plate for Dunn, Wall Street’s reaction to his appointment will; it seems even that is prompting some observers to read bad news between the lines. Many analysts and investors were hoping Nortel’s long-running search for a new leader would result in a high-profile turnaround artist. According to a report from Dow Jones, the fact that the company didn’t hire such a candidate makes some investors wonder if potential hires were pessimistic about Nortel’s future. Still others wonder what would have happened if they’d only bought $1,000 worth of beer rather than….

  • Officials at the Nasdaq Stock Market Inc. announced that David Warren was appointed finance chief effective September 26. Warren replaces Gordon Martin, who left Nasdaq for personal reasons. Warren joined the stock exchange in January as chief administrative officer and was serving as acting finance chief since July.

    Before joining Nasdaq, Warren was CFO of the Long Island Power Authority, one of the largest public power companies in the U.S. There he is credited with leading the effort to raise nearly $7 billion to finance the acquisition of the Long Island Lighting Co. Institutional Investor Magazine and Euromoney crowned it “Deal of the Year.”

    Warren also had a stint in the public sector, serving as deputy treasurer of the State of Connecticut from 1995 to 1998.

    Warren has an M.B.A. from the Yale School of Management.

  • After years of what must have been bad days at the office, Xerox Corp. finance chief Barry D. Romeril announced that he is retiring by the end of the year.

    Romeril presided over high-profile accounting irregularities that resulted in pressure from investors for his resignation. Former CEO G. Richard Thoman also urged him to resign, but that appeal was cut short with Thoman’s own ouster. In the past two years the company acknowledged accounting irregularities at its Mexican operations, submitted to a broad investigation by the Securities and Exchange Commission, and restated its financials a number of times.

    Still, CEO Anne Mulcahy credited Romeril’s financial acumen and efforts to restore the Stamford, Connecticut-based company’s financial footing. In a statement, Romeril said the office-equipment maker was in much better shape financially than it was last year, when observers whispered of a possible bankruptcy filing.