Search for New CEO Launched by Nortel

Nortel Networks Corp., the tarnished star of Canada’s once-highflying tech sector, announced top-level changes Friday. Chief Executive John Roth will retire next year, and Chief Operating Officer Clarence Chandran, already on sick leave, is quitting for medical reasons.

Nortel, the world’s largest supplier of telecommunications equipment, said it has begun the search for a chief executive. Analysts speculated that the company wants an outsider. Roth, 58, said he will quit in April.

“Since Clarence is no longer available in our succession planning, I’ll be working with our board of directors to undertake a search for my successor,” he said. “Our priority is to have my successor in place well before I retire to ensure a smooth and orderly transition.”

Analysts said that the management shuffle is a healthy move for the company, and that the way it was announced--without a named successor for Roth--indicates that the company is looking for external candidates.

A successor with a strong background in data networking would help Brampton, Canada-based Nortel meld that part of the business with telecom equipment manufacturing, said Alex Henderson, an analyst at Salomon Smith Barney.

Nortel is in the midst of cutting 21% of its work force, or 20,000 jobs, and culling under-performing divisions as it tries to trim $2 billion annually from its cost structure. Shares of Nortel shed 4% to close at $14.63 in New York Stock Exchange trading, in a weak market for technology stocks with the Nasdaq composite index down 1%.