Just before the sudden resignations of COO Gary Daichendt and CTO Gary Kunis, Nortel CEO Bill Owens sat down with Network World’s Jim Duffy at Supercomm 2005 to discuss the state of Nortel after completing years of financial restatements. The following is an edited version of the interview.
Just before the sudden resignations of President and COO Gary Daichendt and CTO Gary Kunis, Nortel CEO Bill Owens sat down with Network World’s Jim Duffy at Supercomm 2005 to discuss the state of Nortel after completing years of financial restatements. The following is an edited version of the interview.
Congratulations on completing Nortel's financial restatements. Was it a distraction?
There's been a lot of time, effort, money and management attention to get to this stage. We spent about $200 million in the last 12 months (on it). It has been a distraction. We've had a lot of management attention to this and a lot of sessions among ourselves to make certain that we understood all of the requirements. This has been a year in which we've had a lot of moving parts. It's been a transition year as we've gone through a number of management changes, a number of organizational changes, a restructuring -- 3,250 people we announced we were going to take out of Nortel. While being distracted, we've maintained the business pretty well around the world. We're now in a year where we think 2005 should be a good year.
What are your priorities now?
The priorities are really cash, cost and revenue. Each one is enormously important. We must be focused on growing revenue and growing market share. This company is very much different from a Lucent or Cisco or an Avaya or an Alcatel or Siemens. We have a large enterprise business and we have a large telecom equipment business. There are only a couple of companies who are similar. So this is a great opportunity as telecom networks become more and more IP, more and more packetized, and the enterprise business is itself, by it's nature, a packetized IT set of solutions. We believe that the synergy of the telecom networks and the enterprise business is very good, an important element of growing revenue.
What are your plans now after completing the restatements? There's been some speculation that you might step down or step aside.
No, I don't have any plans (to do that). You're not implying I'm old now, are you? But I'm in good health and I'll do what's best for Nortel. Hopefully, we'll get this company stable and growing, and that's what I'd like to see. I'll do the best thing for Nortel shareholders.
It seems with your recent management additions -- COO Gary Daichendt and CTO Gary Kunis -- you're driving a top-down enterprise focus or motivation through the company. Is that accurate?
I don't think I would quite say that we're driving an enterprise emphasis. From my early days sitting on the board, I thought (enterprise) was a great asset. And from my early days I've been saying we need to develop enterprise. The management additions are really an important element for Nortel -- not just for enterprise. Many good people have been added not just at that level but also through the next level of the company. I continue to be focused though on the importance of having a strong enterprise business. We are distant from Cisco but we have the ability to grow that business substantially, and we will.
In the enterprise, where do you see Cisco most vulnerable?
Cisco is vulnerable in that they don't have any strong competition. So just to be a competitor of note is very important. When we've gone head-to-head with Cisco, we've had many wins. I can't tell you we always win but we win a lot. Some of them are small, some of them are larger. The city of San Jose -- we took some interest in that one in particular: 'This is the way to San Jose' (referring to Nortel's 'This is the Way' marketing slogan). But we have competed in large bids. We've won a lot of those networks based on quality and cost. It's important to realize that Cisco's greatest challenge is to continue to operate without a competitor because some of us will become competitors, and that means that there will be lower cost in the marketplace to challenge their margins.
Your competitors in the enterprise have acquired application acceleration companies. Do you see that as a big market for Nortel and if so, how do you plan to enter it?
We do a lot of this inside Nortel. There are a lot of products inside Nortel. It's obviously an important area. And we're certainly involved and aware of it. It's important.