NT, from Barron's
Nortel Chief's Crammed Calendar
THE TILLER MEN at Nortel Networks have thrown investors through some awful jibes since the telecom supplier sailed the crest of the Internet bubble. Just when the Nortel seemed to have regained its keel in April, the Toronto-based dreadnaught fired its three top officers and disclosed that -- upon reflection -- the numbers it had reported for the first half of the 2003 year didn't jibe. Until Nortel figures out how it really did in the past 18 months, it's a deserving target for anyone's gibes.
After sacking its captain in April, Nortel turned the helm over to a board member and retired U.S. Navy admiral, William A. Owens. The admiral had a distinguished career of 34 years in the Navy. He commanded America's largest fleet of nuclear subs and was the No. 2 man on the Joint Chiefs of Staff. The admiral was a driving force in the military's move away from overpriced custom computers to industry-standard commercial systems.
Adm. Owens has gained business experience since he retired from the service in 1996... a lot of business experience, from the looks of it. Nortel's proxy statements showed him serving simultaneously on more than a dozen corporate boards -- in addition to Nortel's, which he joined in 2002. A Nortel spokesperson says that he's going to lay aside most of those commitments, to focus his attention on Nortel.
This won't be his first time running a company, either. Right after leaving the Navy, Owens was president of the computer-consulting firm Science Applications International. From 1998 until May of this year, Owens headed up Teledesic, a privately held misadventure that once planned to launch 840 satellites to bring Internet service to the unwired souls in the world's uncharted territories. Teledesic has scaled back its ambitions to 30 satellites. Other privately-held firms where Owens has gained experience include Extend America, a startup that hopes to bring wireless service to distant parts of North Dakota, and Ultrastrip Systems, a company that's struggling to sell a robot that scrapes the barnacles off of ship bottoms.
Nortel's new chief was traveling Friday, so I couldn't get his help in grading his seemingly busy post-Navy career in business. I found 15 public companies whose boards he served on -- most of them concurrently. They include giants like British American Tobacco, Daimler Chrysler, Symantec and Telstra, as well as some very small and -- for investors -- very disappointing companies like BioLase Technology, Cray, Metal Storm and Microvision.
With the admiral's commitments so diverse, I figure that one way to rate his performance as a fiduciary is to consider his public companies as an investment portfolio. And over the past 12 months, an equally weighted portfolio of the admiral's public companies would have done quite well. It's up 18% since June of last year, compared to 10% for the Nasdaq Composite Index and 11% for the S&P 500.
Big companies like Symantec and British American Tobacco contributed much of the outperformance in the admiral's hypothetical portfolio -- and perhaps he contributed to these firms' good decisions. But among the 10 small firms where Owens should have had the most influence, the performance has been dreary. In the last 12 months, the shares of these firms with market caps below $15 billion have lost an average of 9%...some of them in blow-ups as disgraceful as Nortel's.
Let's hope that the admiral is paying attention to the right parts of the Nortel portfolio. |
