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.
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.
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