Dave House's resignation from Nortel Networks was expected and shows that his position as president of the telecom giant was largely ceremonial, according to industry observers.
Late Monday, House made the announcement that he was stepping down as president of Nortel. Exactly one year ago Nortel announced its plans to acquire Bay Networks for $9 billion. House was formally chairman, president and CEO for Bay.
House says he will leave the company in 75 days, which will coincide with the same day a year ago that Nortel completed it acquisition of Bay. House will remain on Nortel's board.
Analysts say the timing is no coincidence. They say House actually resigned his duties and gave up his power one year ago when he signed the letter of intent for Nortel to acquire his company.
"Right on time," says Craig Johnson, principal at the PITA Group in Portland, Ore. "The upper, senior management (in acquired companies) usually get (financial) kickers if they stay around for a predetermined time. One year is about the right time for him to get his money."
Nortel has no plans to fill House's position, another indication that his tenure at the company was always intended to be temporary.
"Before we did the merger, I was president and CEO, so I'll probably return to that," says Nortel CEO John Roth.
"House was not going to run Nortel," says Johnson. "He just doesn't have the ability for it."
Indeed, the technical savvy House possesses in personal computers, compliments of his 20-plus years at Intel, did not translate into networking savvy. Though he won kudos from Wall Street for dressing Bay Networks up for sale, his lack of understanding of networking technology was evident every time he delivered a keynote speech at a major industry trade show, observers say.
House denies that he was overwhelmed by the technical aspects of the networking industry.
"From a technology standpoint, clearly our line is the industry leader in Layer 3 switching, gigabit (networking), VPNs and WAN access," he says. "It must have been a competitor you were talking to."
House says it was time to go now that Nortel and Bay have been integrated.
"Basically, I had worked myself out of a job," House says, stealing a quote delivered a day earlier by his boss Roth. "The merger job is done and I notice my work load falling off. I think it's a good time to transition."
House denies that his appointment at Nortel was transitional.
"We did the merger with the idea that I would be in that position on an indefinite basis," he says.
Roth says House's position was more than temporary because he helped orchestrate the massive merger of Bay and Nortel. He also helped define how Bay's IP and data networking technology would fit across all of Nortel's assets; and he brought a faster, "Internet speed" pace to the slow moving telecom giant.
House's future plans include getting some rest, unpacking some of the boxes in his new home, spending time with his children and grandchildren, and playing golf. He may also dabble in venture capital funding of Silicon Valley start-ups.
"At this point in my life I've had enough success that I don't need to work unless I want to," he says. "Whatever I do will have to be exciting and challenging because I won't do it if it's not fun."
Separately, Nortel announced that Bill Hawe has been appointed chief technology officer. Hawe was formally vice president of architecture for Bay.
RELATED LINKS
Nortel to buy Bay
Network World Fusion, 6/15/98.
I've been House trained
Sitting in as David House tries to turn his new company around. Network World, 7/28/97.
