Nortel named William Owens, a member of the board of directors and former president and chief executive of satellite specialist Teledesic LLC, as its new chief executive. Former chief executive Frank Dunn was "terminated for cause," the company said.

Earlier, Nortel had named William Kerr its new chief financial officer and MaryAnne Pahapill its new controller. It placed former CFO Douglas Beatty and controller Michael Gollogly on paid leave while financial statements were probed by outside auditors.

Beatty and Gollogly were also fired Wednesday while the appointments of Kerr and Pahapill were made permanent. The company said that four other unnamed executives were placed on paid leave Tuesday.

Nortel chairman of the board Lynton Wilson said the firings "are about accountability for our financial reporting." As a result of an independent review, Nortel said it would reduce previously announced net earnings by 50 percent for 2003 along with a reported net loss for the first half of 2003. Nortel's audit committee has not finalized financial statements for 2003, and more revisions may be forthcoming.

The combination of the Nortel bad news and increased fighting in Iraq around Fallujah combined to send markets down, with the Dow Jones Industrial average off 84 points. The Nasdaq was down 26 points.

Nortel dropped 26 percent, to $4.19 per share, while shares of Lucent Technologies Inc., itself under SEC investigation, also dropped.

Nortel warned in an analysts' call of possible consequences for its debt rating and acceleration of debt securities, which could make it "unable to meet respective payment obligations," possibly forcing the company to seek alternative funding sources.

One investment analyst on the call said "this is one more piece of bad news to hammer the communication OEMs that serve the carrier markets. In one sense, it may be specific to Nortel, but in another sense, it taints the industry at large."

By: DoeMemory
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