Business Blog: Hoover’s Business Insight Zone

Today’s Company of the Day is Nortel Networks.

~~~

The halcyon days of the dot-com boom were good to Nortel Networks, but the ride didn’t last very long. The company, whose corporate roots stretch all the way back to the early days of telephony in the late 19th century, capitalized on the huge expansion of the Internet in the late 1990s and early 2000s. In the end, Nortel couldn’t sustain the growth rates of those years — nor could it sustain the oversized corporate footprint it built up by rapid expansion. Nortel is much leaner these days than it was at the beginning of this decade. (Its 2006 revenue and employee numbers were a little more than a third of what they were for fiscal 2000.) It also remains a top maker of big telecom networking equipment, although it is somewhat smaller than Alcatel-Lucent and much smaller than either Cisco and Motorola.

At the moment, though, the company has bigger fish to fry than overtaking its competition. Besides its own recent history of underperformance and the seemingly permanent volatility of its market, Nortel is engaged in the long process of emerging from a damaging accounting scandal, one that led to the departure of the former CEO and the restatement of several years’ worth of financial statements. These days Nortel is run by CEO Mike Zafirovski, a hard-charging individual who earned his stripes in 25 years at General Electric before becoming the #2 executive at Motorola. (He took the top job at Nortel after it became clear that he would not win the same role at Motorola.) Despite his track record of managerial brilliance, Zafirovski has his work cut out for him if Nortel is ever to regain the cachet it enjoyed when the dot-com boom was at its peak.

~~~