Magazine

Table: A Lot of Balls in the Air


Here is CEO Dunn's turnaround plan for telecom-equipment maker Nortel. His prospects for success are rated with one to four stars, with four stars the best.

TRADITIONAL GEAR *

Telecom companies slashed spending on Nortel's optical gear to $1 billion in 2001 from $8 billion in 2000. So Dunn is beefing up optical systems it sells to corporations with extra security and voice capability. But Cisco Systems has 90% of that market.

WIRELESS **

Nortel lagged behind its competitors in 2001 in the market for next-generation wireless networks. But in just four months this year, Dunn has nabbed an industry-leading $1.2 billion in business, pushing the company ahead of Nokia. Ericsson and Nokia are still potent threats.

COSTS ***

Dunn has cut 14,500 jobs and plans 3,500 more. That will reduce the size of the workforce to 42,000, down from a high of 95,000 in 2000. He slashed first-quarter costs by 39% from year-ago levels. But further cuts could hobble sales and research and development.

BALANCE SHEET *

Nortel has $3 billion in cash on the books, partly by issuing debt. It's expected to burn $2.1 billion this year and $1.6 billion in 2003. Dunn is working on another debt offering but must also sell off noncore assets. Without more money, he may have to seek a merger partner.

Data: Deutsche Bank, company reports


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