Nortel Network's stock rose on Monday's news of a new president and chief executive officer with the reputation for being a tough, high-energy leader who can make difficult decisions in order to turn a profit.

Mike Zafirovski will replace former U.S. admiral Bill Owens, who is leaving as Nortel's president and CEO after less than two years in the job.

Incoming Nortel Networks president and CEO Mike Zafirovski smiles as he makes a joke during a news conference in Toronto. (CP Photo/Adrian Wyld)
Incoming Nortel Networks president and CEO Mike Zafirovski smiles as he makes a joke during a news conference in Toronto. (CP Photo/Adrian Wyld)

Owens has led Nortel since the firing of former CEO Frank Dunn in April 2004 following an accounting scandal that led to the company having to restate several years of earnings.

Markets reacted positively to the appointment, seeing Nortel (TSX:NT) shares jump upward by 21 cents on Monday, closing at $4.10.

Zafirovski, 51, arrives at Nortel from communications giant Motorola, where he inherited the struggling cellphone division in 2000.

To turn the flagship unit around, he slashed thousands of jobs and fired 11 of the company's 19 top managers. It worked, and sales rose.

That, says BusinessWeek's Roger Crockett, means if cuts are needed at Nortel, they'll come.

"This is a guy that wants to improve the margins," says Crockett. "He wants to improve profitability and that almost always means cutting costs, which is synonymous with cutting jobs."

Crockett adds that Nortel has already been drastically cut back and no one knows what is in store for the company.

But if you listened to Zafirovski's comments Monday, he thinks the company is "well-positioned" to grow and sees it continuing down its path of "financial transformation."

Zafirovski told reporters he loves to compete. "I'm convinced that Nortel will be big winner again," he said.

With this appointment, says Tyler Chamberlin of the University of Ottawa's School of Management, Nortel is looking to the future.

"They have to be thinking of how they're going to introduce new products that are going to be desirable to new markets, and this is what you're going to see happen, I believe, as a result of this change."

Before his time at Motorola, Zafirovski spent more than two decades heading up a number of different units at GE.

Zafirovski was passed over as Motorola's CEO in late 2003, leading to speculation that he would eventually leave the company. He resigned from Motorola this January.

He officially takes over from Owens on Nov. 15.