Nortel last Monday surprised the industry by announcing that CEO Bill Owens will leave in mid-November and be replaced by Motorola President and COO Mike Zafirovski.

But not so surprising given Nortel's track record over the past few years, the move might not go smoothly. Motorola filed a lawsuit the next day against Zafirovski seeking to prevent him from taking the new job, based on an alleged breach of non-compete agreements.

Owens' retirement caught industry watchers offguard in that the 65-year-old ex-vice chairman of the Joint Chiefs of Staff recently indicated that he intended to remain CEO after leading Nortel through a financial scandal and refocusing the company on its enterprise network operations.

Owens became CEO after Nortel fired then-CEO Frank Dunn in April 2004 upon determining he helped orchestrate Nortel's bogus accounting, which forced the company to restate years of earnings.

During a Webcast press conference, Owens said he was not asked to step down. He said he "openly and willingly" participated in the executive search for his replacement, which began after the company's annual shareholder meeting in June.

Zafirovski, 51, has a 30-year career of leadership with two of the world's highest-profile corporations, General Electric and Motorola.

"Zafirovski is well respected by the street, and seen as a competent manager in the telecom industry," wrote UBS Warburg Analyst Nikos Theodosopoulos in a bulletin. "Nortel has been in need of telecom and operational experience in the top role."

Ramesh Kapoor, CIO for the public school system in Virginia Beach, Va., says he's looking forward to new leadership at Nortel. Kapoor says the school district has had some problems with Nortel's Business Communications Manager VoIP gear and he has not been satisfied with Nortel's support. Kapoor says he hopes Zafirovski will bring new direction to Nortel.

Features Editor Neal Weinberg contributed to this report.