House's resignation no surprise

House's resignation no surprise


Dave House's resignation as president of Nortel Networks yesterday came as no surprise to hardened industry observers, but some believe it shows his role was largely ceremonial.

House announced yesterday he will step down as president of Nortel Networks, one year to the day after Nortel announced that it would acquire Bay Networks for $US9 billion. House had been chairman, president and CEO of Bay.

House says he will leave the company on August 31, again, one year to the day that Nortel completed its acquisition of Bay. House will remain on the Nortel board.

Analysts claim the timing is no coincidence. Some believe House actually resigned his duties and gave up his power one year ago when he signed the letter of intent for Nortel to acquire his company.

"Right on time," says Craig Johnson, principal at the PITA Group in Oregon. "The upper, senior management [in acquired companies] usually get [financial] kickers if they stay around for a predetermined time. One year is about the right time for him to get his money."

Mark George, newly appointed Asia-Pacific president of enterprise solutions, defended House's year-long tenure at Nortel Networks during a Sydney press conference.

"Dave is not actually leaving the company," he said.

George said House will remain an "active member of the board", and denied suggestions his role was ceremonial.

"House has been an instrument of change in this company," George said.

Nortel says it has no plans to fill House's position, however, which PITA Group's Johnson believes is another indication his tenure at the company was always intended to be temporary.

"House was not going to run Nortel," Johnson said.

"Before we did the merger, I was president and CEO, so I'll probably return to that," said Nortel CEO John Roth.

Roth said House's position was more than temporary because he helped orchestrate the massive merger of Bay and Nortel. He also helped define how Bay's IP and data networking technology would fit across all of Nortel's assets; and he brought a faster, "Internet speed" pace to the slow-moving telecom giant.

Though he won kudos from Wall Street for dressing Bay Networks up for sale, his lack of understanding of networking technology was evident every time he delivered a keynote speech at a major industry trade show, observers say.

House's plans for the future are to get some rest, unpack some of the boxes in his new home, spend time with his children and grandchildren, and play some golf. He may also dabble in venture capital funding of Silicon Valley start-ups.

"At this point in my life I've had enough success that I don't need to work unless I want to," he says. "Whatever I do will be exciting and challenging because I won't do it if it's not fun."

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