The chief executive of Nortel Networks Corp., the world's largest supplier of telecommunications equipment, told Reuters on Monday that it has delayed the planned spinout of its fiber-optic components unit because the market outlook remains ``cloudy''. 

Nortel is planning an initial public offering for its components unit, which makes parts that boost the speed and capacity of fiber-optic networks. 

It said last summer that it wanted to create a separate, publicly traded company, in which it would keep a majority share, to unleash buried value for the business and acquire other component companies. 

``At one time we were aiming for this fall and I would have to say we've slipped that, certainly, by six months,'' John Roth told Reuters in an interview. He said Nortel would review the IPO timing based on the market's performance in six months. 

``There's just no appetite out there for it, but we've continued to put the management structures in place, we're doing separate filings, the employees know that this company will move out in terms of the stock option treatment,'' he said. 

``For instance, these people are actually going to be given options in the optical business, not in Nortel.'' 

Nortel also wants the spinout to help it maintain its dominant position in fiber-optic network equipment. 

The company maintained its top rank in the first quarter, recent market research by Dell'Oro showed, but its sales fell 52 percent amid a slowdown in carrier spending and scaled back plans for long-haul networks. In contrast, rival Lucent Technologies (NYSE:LU - news) took second spot with a 29 percent sales gain. 

Roth declined to make any forecasts on when the market will recover, saying ``the crystal ball is still pretty cloudy.'' 

The outgoing chief executive, who retires in April, made the comments after telling Nortel employees about a share repricing program that is meant to sweeten pay packages for staff. 

Nortel shares, which have tumbled more than 80 percent this year, gained 2 percent to C$21.22 on the Toronto Stock Exchange at midday and added 3.4 percent to $13.86 on New York. 

Under the program, staff will trade in old options, which have a strike price above the current Nortel share value, for new options. A Nortel spokeswoman said the options affected have varying strike prices. 

``We've got all these options and so many of them are under water that we're feeling a little exposed in our ability to retain some of our best talent,'' Roth said after a ``town hall'' meeting with staff. 

``Executives, like myself, knew the game when we were getting into it, so we're not getting our options reexchanged. This is for the rank and file of our employees.'' 

Nortel, hit by a downturn in carrier spending, reported a deep first-quarter loss and said it would cut 20,000 jobs in low-growth business areas, which will leave it with about 75,000 staff mid-way through this year. 

The repricing plan is meant to position the company so its best staff are well motivated when customer spending resumes, anywhere between six and 18 months from now, Roth said. 

``This exchange program will really only kick in next January, so this is to make sure that this is looking ahead and making sure that we're in good shape next year.'' Roth said. 

The plan, which has already received regulatory approval, will allow eligible employees to cancel options granted on or after November 12, 1999 for new options that will be issued at least six months and one day from the cancellation date. 

For options issued between Nov. 12, 1999, and Feb. 12, 2001, staff will receive two new options for every three options canceled. For options issued on or after Feb. 13, 2001, staff will receive three new options for every four options canceled. 

The exercise price for the new options will be equal to 100 percent of the market price of one Nortel common share on the grant date of the new options. 

``I think that will give them options that they can hope to see a value in, whereas some of the options were granted up to $80 U.S. -- it's probably a while before they see those worth that kind of money,'' Roth said.