UBS Warburg Analyst

Nortel Networks Corp. has shifted senior management, elevating President Bill Owens to vice chairman and CEO, and naming a former Cisco Systems Inc. sales executive as president and COO.

Gary Daichendt, who left Cisco four years ago to spend more time with family and consider career alternatives, has been tapped as Nortel’s new president and COO. Daichendt had been investing in commercial real estate and speaking publicly at various forums. Gary Daichendt… (brings) significantly more telecom experience to senior managementNikos Theodosopoulos >Text

Daichendt will report to Owens, who will continue to drive Nortel’s strategic direction. The changes take effect March 14.

Daichendt has more than 30 years of experience in the global technology industry and was previously executive vice president of worldwide operations at Cisco. Prior to Cisco, Daichendt worked at both Wang and IBM.

Daichendt will be responsible for leading Nortel’s carrier and enterprise businesses, research and development, services and supply chain functions and global sales and operations. He assumes the responsibilities of Pascal Debon, president of Nortel’s Carrier Networks business. Debon will now be a special advisor to Owens.

The roles of other high-ranking Nortel executives — Enterprise President Malcolm Collins, Global Operations President Sue Spradley and Global Services President Chahram Bolouri — are unclear. Nortel did not return calls by press time.

Analysts viewed the appointments positively and suggested Nortel may not be done.

“Gary Daichendt… (brings) significantly more telecom experience to senior management,” states UBS Warburg Analyst Nikos Theodosopoulos in a bulletin on the management changes. “He was well respected in the industry and did a good job in operations and managing the sales force at Cisco.”

Owens background is in military and high tech. He had been chairman and CEO of low-earth-orbit satellite company Teledesic; president, COO and vice chairman of consultant and integrator Science Applications International Corporation (SAIC); and vice chairman of the Joint Chiefs of Staff, and the second-ranking military officer in the U.S.

“As Nortel recovers from its accounting woes and the industry moves toward consolidation, we believe the company may look to replace its CEO within the year,” Theodosopoulos states. “We believe Owens was brought in to lead Nortel through its restatement challenges and going forward, (the) company may look to have a CEO with more telco-related experience.”

Nortel also said CFO Peter Currie will become executive vice president and CFO on March 14. Currie was named CFO on Feb. 14 following Nortel’s completion of restating three years of financial results.

Nortel has been remaking senior-level management since it fired three top executives — including CEO Frank Dunn — a year ago following an accounting scandal that led to the financial restatements.

Recent appointments have included a chief marketing officer, chief strategy officer and a chief ethics and compliance officer.

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