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Nortel Fires CEO, Postpones 1Q Report

The telecom equipment maker said it fired CEO Frank Dunn and two other top executives for cause, and that it will also restate 2003 earnings.
NEW YORK (AP) -- Nortel Networks Corp. fired its CEO, Frank Dunn, and two other top executives for cause Wednesday and said it would delay reporting its first-quarter earnings.

The telecom equipment maker also said its audit committee was reviewing its previously reported financial results for the past three years. The company said it would restate 2003 earnings, reducing the year's profit by about 50 percent.

Nortel, based in Brampton, Ontario, also terminated its chief financial officer, Douglas Beatty, and controller, Michael Gollogly, both of whom had been put on paid leave of absence March 15.

The company said it put another four senior financial executives on paid leaves of absence Wednesday "pending further progress of the independent review."

William Owens has been appointed president and chief executive officer of the company.

Owens, a Nortel director since 2002, has been chairman and chief executive officer of Teledesic LLC, a satellite company, since 2003. He was co-chief executive officer from August 1999 to June 2003.

Previously, he was president, chief operating officer and vice chairman of Science Applications International Corp., an employee-owned military contractor.

Prior to that, Admiral Owens was a vice chairman of the U.S. military's Joint Chiefs and commander of the U.S. Sixth Fleet during Operation Desert Storm.

"I'm very happy to be here as CEO of this remarkable company," Owens said on a conference call with investors. "We have had our challenges with the independent review. We will cooperate with the authorities in every way possible and we will put this behind us."

Both the Securities and Exchange Commission and the Ontario Securities Commission have launched formal probes of Nortel's accounting, the company disclosed early this month.

The company said its results for the quarter will be released when its audit committee completes its review.

Asked about the firings in a conference call with analysts, Lynton (Red) Wilson, chairman of the board, said, "Because the investigations that are being conducted are ongoing, it would be inappropriate to provide specifics, but I can say it is about accountability for financial reporting."