Nortel Networks on Tuesday announced the departure of its President and Chief Executive Officer Mike Zafirovski, casting the final nail in the coffin of the crumbling Canadian telco.

Describing the exit as ‘a logical departure point’, Harry Pearce, Chairman of Nortel''s Board of Directors said the step down will take place with immediate effect.

“Mike made a commitment to see the process through the stabilization of the company, sale of its largest assets and the right plans and people to continue operating our business and serving customers. He has done so,” said Pearce.

Zafirovski, who has served the company for three years, had first notified the company's board in April on his plans to leave in Q3.

“A combination of businesses running well, good progress on the sale of (Nortel's) businesses (under bankruptcy protection) and having just certified second-quarter results, we thought this would be a natural point,” stated Zafirovski.

Additionally, the company’s Board of Directors will be brought down from nine to three members, comprising of John A. MacNaughton, Jalynn H. Bennett and David Richardson, with Richardson taking over as Chairperson.

Nortel Networks will meanwhile seek the Canadian court sanction for its monitor, Ernst & Young Inc., to assume an increased role in the business, sales processes and other restructuring activities under the Companies' Creditors Arrangement Act proceedings.

The company will streamline its structure and its principal business units- Wireless Networks, Enterprise Solutions, Metro thernet Networks, Carrier VoIP and Application Solutions and the LG-Nortel JV will testify to Chief Restructuring Officer Pavi Binning.

Also, the company will be on the look out for a chief officer for is units in U.S. Chapter 11 proceedings. The appointment will however be dependent on the US court approval.

The Canadian telecom colossus, which had filed for bankruptcy protection in January this year, ran into troubled waters in June, when it accepted a bid from Nokia Siemens Networks to acquire its wireless asset, inviting strong resistance from Canada and from RIM in particular.

Citing that the deal will strip the country of a critical technology, Research in Motion co-chief executive officer Michael Lazaridis has asked the Canadian government to start fresh talks on the sale of Nortel Networks Corp. assets to Ericsson.

Last month, the Swedish telco had reached a deal with Nortel at $1.13 billion for its current code-division multiple access, or CDMA, technology.

Separately, Nortel said its second-quarter revenue amounted to $1.97 billion, down 25 percent from a year earlier but up 14 percent from the first quarter. The management operating margin was $ 16 million as compared to $ 114 million at the end of Q2 2008. Cash balance was $2.56 billion as compared to $ 2.48 billion at the end of the previous quarter.

Revenues from Carrier Networks business was down 20 % at $ 920 million but is on an up swing of 25 % when compared on a sequential basis.