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As industry giants vie for the final pieces of what once was North America’s largest telecom equipment vendor, former stock market darling Nortel Networks Corporation today announced that revenues fell 25 percent for the second quarter and that its president and CEO is stepping down.

 

Officials at Toronto-based Nortel (News - Alert) announced that revenues had fallen to $1.97 billion for the three-month period ended June 30 – a quarter that saw a net loss of $274 million, or 55 cents per share, compared to a loss of $113 million, or 23 cents per share in the year-ago quarter.

 

At the same time, Nortel – which is looking to sell its CDMA/LTE (News - Alert) business to Swedish telecom giant Ericsson for $1.13 billion – announced that President and CEO Michael Zafirovski was leaving the company. Calling Zafirovski’s departure “a natural transition” point, officials at Nortel also said the company’s board of directors would be reduced from nine to three members.

 

Harry Pearce, chairman of the board, said Zaiforovski “made a commitment to see the process through the stabilization of the company, sale of its largest assets and the right plans and people to continue operating our business and serving customers.”

 

“He has done so,” Pearce said. “I appreciate the commitment and passion he brought to this company since day one, including his guidance through the extremely difficult decisions we faced since filing for creditor protection. I also wish to recognize the enormous commitment and dedication of the departing members of the Board who really believed in and worked hard for Nortel.”

 

Zafirovski said he was “proud” to be associated with Nortel, which filed for bankruptcy earlier this year despite what the former chief called valuable people and technology.

 

“Although solid progress was made in many areas, at the end, the capital structure and legacy costs coupled with the economic downturn proved too difficult to surmount,” Zafirovski said. “I have tremendous respect for the board of this company and the process we went through to initially transform the company, and since filing, to work to maximize the value of our businesses while preserving employment and customer commitments to the greatest extent possible.”

 

Due largely to cost-cutting, Nortel’s $1.97 billion in revenues for the second quarter – though down year-over-year – marks a 14 percent rise sequentially.

 

The $274 million loss for the quarter reflected “reorganization” costs of $130 million related to the bankruptcy.

 

The company’s carrier networks business saw a 20 percent loss year-over-year; its enterprise solutions a 28 percent loss; metro Ethernet networks a 27 percent loss; and LGN a 37 percent loss.

 

In what will be his final report on Nortel’s earnings, Zafirovski described Nortel’s customer service levels as “strong.”

 

“These operating and customer results are a real tribute to the professionalism and dedication of the Nortel employees and the outstanding support from our customers, partners and suppliers for which I’m deeply appreciative,” Zafirovski said. “Throughout this process, we remain focused on serving our customers. We are pleased with the feedback we have received from our customers and we continue to remain focused on maintaining the high service/product performance levels that customers are accustomed to.”

 

TMCnet is meeting with officials from Nortel later this morning. Stay tuned for comments from company officials.