By David Bruser
Canada, June 30: Nortel Networks Corp.’s chief financial officer, Peter Currie, tried to assure shareholders that the light at the end of the telecom’s long tunnel is not another train.
Nonetheless, just like last year, the telecom-equipment firm’s annual general meeting devolved into the standard airing of old shareholder wounds and concerns about the company’s participation in a controversial railway project connecting China and Tibet.
In fact, a failed shareholder proposal that Nortel spell out its human rights policy won 32 per cent of voters yesterday.
Tsering Khangsar of the Canada Tibet Committee fears the Qinghai-Tibet Railway will dilute the culture and facilitate troop movement and the theft of the area’s natural resources.
She told the crowd at the Congress Centre on Dixon Road that she feels it represents a final stage in Tibetan cultural genocide.
New CEO Mike Zafirovski told her, “We’ve given this lots of thought. We view this matter finished, and we’re moving on,” then referred her to the proxy circular, which spelled out why the board opposed the shareholder proposal.
“We have a history of operating with integrity and the highest ethical business principles in respect of matters associated with human rights issues,” the proxy said. “It has always been our goal to conduct our business with a high regard for health, safety, the environment and social responsibility.”
Just two days after Nortel announced 1,900 layoffs and changed its pension formula in the hopes of saving hundreds of millions of dollars, Currie and new CEO Mike Zafirovski faced some of their critics.
They included 72-year-old D.K. Mohni telling Nortel’s top executives that, “I purchased stocks in the company in 2000. I invested more than $80,000. Now the value is less than $3,000. I think I hold you guys responsible.”
Zafirovski, who joined the firm last fall, told Mohni, “We cannot change the past. The company almost went bankrupt in 2003. We’re doing our absolute best.
“Your current investment today hopefully will grow.”
But Zafirovski and Currie offered this week’s moves as proof of their intention to make the firm profitable again.
“We don’t just put things on a PowerPoint presentation and go on to the next,” Zafirovski said. “We have a $2.5 billion (U.S.) (unfunded pension) liability. Also, operationally, we had 100-plus locations globally where we’re trying to do customer service.”
Without such reductions, Zafirovski added, “there may not be a company a few years from now.”
He also reaffirmed commitment to the long term and played down speculation that a major partnering or sale of the firm is imminent. Increasing shareholder value, he added, lies in performing well, not a sale.
He told shareholders, “We can, we will be a great company again,” adding later that the turnaround could take up to five years.
Zafirovski said he is also wary of the “two deadly sins” of acquisitions: overpaying and poor integration.
In a cavernous room populated with elderly shareholders, retiree Lynn Armstrong ate a light breakfast before the meeting began, talking to a retired police officer about the job cuts and pension changes announced Tuesday.
“I don’t think they had much choice. They had to cut cost,” the retired policeman said, but added, “Their accounting — have they got it right, yet?”
Armstrong, a shareholder since 1983, said, “But are they cutting (from) the people in Canada?” When she was told Canadian employees are subject to the pension changes, she said she was “not at all happy.”
The retired policeman, though, felt differently.
“General Motors and Ford are having a real tough time with that. There’s no other way to do it.”
Zafirovski defended the moves after the meeting, but admitted it wasn’t exactly popular. “No standing ovation. To say some people are going to be happy overnight is not going to happen,” he said, adding the job cuts may affect Canada but not in a major way.
Yet some, despite the cascade of bad news in recent years, including accounting problems, fired executives, lawsuits and investigations, will hang on to their investment.
This, despite the fact that Currie estimated the financial restatements alone have cost the firm $100 million.
