##### 



Exhibit 99.1 News Release
    
    (NORTEL LOGO)
 www.nortel.comFOR IMMEDIATE RELEASE:
    
    March 18, 2005For more information:Media
Marion MacKenzie
(905) 863-1035
mackenm@nortel.com
    
    Investors
(888) 901-7286
(905) 863-6049
investor@nortel.com
 Nortel Files Third Quarter 2004 Financial Statements TORONTO  Nortel* Networks Corporation [NYSE/TSX:NT] today announced that it and its principal
operating subsidiary, Nortel Networks Limited (NNL), have filed their unaudited financial
statements for the third quarter of 2004 prepared in accordance with United States generally
accepted accounting principles, and related Quarterly Reports on Form 10-Q and corresponding
Canadian filings. Annexed to this press release is certain selected unaudited financial information
of the Company for such quarterly period. ************************ About Nortel Nortel is a recognized leader in delivering communications capabilities that enhance the human
experience, ignite and power global commerce, and secure and protect the worlds most critical
information. Serving both service provider and enterprise customers, Nortel delivers innovative
technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and
applications, and wireless broadband designed to help people solve the worlds greatest challenges.
Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at
www.nortel.com. For the latest Nortel news, visit www.nortel.com/news. Certain information included in this press release is forward-looking and is subject to
important risks and uncertainties. The results or events predicted in these statements may differ
materially from actual results or events. Factors which could cause results or events to differ
from current expectations include, among other things: the outcome of regulatory and criminal
investigations and civil litigation actions related to Nortels restatements and the impact any
resulting legal judgments, settlements, penalties and expenses could have on Nortels results of
operations, financial condition and liquidity; the findings of Nortels independent review and
implementation of recommended remedial measures; the outcome of the independent review with respect
to revenues for specific identified transactions, which review will have a particular emphasis on
the underlying conduct that led to the initial recognition of these revenues; the restatement or
revisions of Nortels previously announced or filed financial results and resulting negative
publicity; the existence of material weaknesses in Nortels internal controls over financial
reporting; the impact of Nortels and NNLs failure to timely file their financial statements and
related periodic reports, including breach of its support facility and public debt obligations and
Nortels inability to access its shelf registration statement filed with the United States
Securities and Exchange Commission (SEC); ongoing SEC reviews, which may result in changes to our
public filings; the potential delisting or suspension of Nortels and NNLs publicly traded
securities; the impact of management changes, including the termination for cause of Nortels
former CEO, CFO and Controller in April 2004; the sufficiency of Nortels restructuring activities,
including the work plan announced on August 19, 2004 as updated on September 30, 2004, including
the potential for higher actual costs to be incurred in connection with restructuring actions
compared to the estimated costs of such actions; cautious or reduced spending by Nortels
customers; fluctuations in Nortels operating results and general industry, economic and market
conditions and growth rates; fluctuations in Nortels cash flow, level of outstanding debt and
current debt ratings; Nortels ability to recruit and retain qualified employees; the use of cash
collateral to support Nortels normal course business activities; the dependence on Nortels
subsidiaries for funding; the impact of Nortels defined benefit plans and deferred tax assets on
results of operations and Nortels cash flow; the adverse resolution of class actions, litigation
in the ordinary course of business, intellectual property disputes and similar matters; Nortels
dependence on new product development and its ability to predict market demand for particular
products; Nortels ability to integrate the operations and technologies of acquired businesses in
an effective manner; the impact of rapid technological and market change; the impact of price and
product competition; barriers to international growth and global economic conditions, particularly
in emerging markets and including interest rate and currency exchange rate fluctuations; the impact
of rationalization and consolidation in the telecommunications industry; changes in regulation of
the Internet; the impact of the credit risks of Nortels customers and the impact of customer
financing and commitments; stock market volatility generally and as a result of acceleration of the
settlement date or early settlement, which is currently not available, of Nortels forward purchase
contracts; the impact of Nortels supply and outsourcing contracts that contain delivery and
installation provisions, which, if not met, could result in




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##### 



Page 2 the payment of substantial penalties or liquidated damages; and the future success of Nortels
strategic alliances. For additional information with respect to certain of these and other factors,
see the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed by Nortel
with the SEC. Unless otherwise required by applicable securities laws, Nortel disclaims any
intention or obligation to update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise. -end- *Nortel, the Nortel logo and the Globemark are trademarks of Nortel.




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##### 



Page 3 NORTEL NETWORKS CORPORATION
Consolidated Statements of Operations (unaudited) Three months ended September 30,
    
    
    Nine months ended September 30,(US GAAP; millions of U.S. dollars, except per share amounts)
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003As restated
    
    
    
    
    
    
    As restatedRevenues
    
    $
    2,179
    
    
    $
    2,344
    
    
    $
    7,213
    
    
    $
    6,927Cost of revenues
    
    
    1,393
    
    
    
    1,214
    
    
    
    4,319
    
    
    
    4,020Gross profit
    
    
    786
    
    
    
    1,130
    
    
    
    2,894
    
    
    
    2,907Selling, general and administrative expense
    
    
    512
    
    
    
    527
    
    
    
    1,596
    
    
    
    1,458Research and development expense
    
    
    501
    
    
    
    455
    
    
    
    1,465
    
    
    
    1,440Amortization of acquired technology and other
    
    
    2
    
    
    
    32
    
    
    
    7
    
    
    
    98Deferred stock option compensation
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    16Special charges
    
    
    93
    
    
    
    80
    
    
    
    99
    
    
    
    198(Gain) loss on sale of businesses and assets
    
    
    (39
    )
    
    
    (17
    )
    
    
    (114
    )
    
    
    (6
    )Operating earnings (loss)
    
    
    (283
    )
    
    
    52
    
    
    
    (159
    )
    
    
    (297
    )Other income (expense)  net
    
    
    44
    
    
    
    148
    
    
    
    112
    
    
    
    302Interest expenseLong-term debt
    
    
    (45
    )
    
    
    (45
    )
    
    
    (132
    )
    
    
    (136
    )Other
    
    
    (3
    )
    
    
    (8
    )
    
    
    (18
    )
    
    
    (22
    )Earnings (loss) from continuing operations before income
taxes, minority interests and equity in net loss
of associated companies
    
    
    (287
    )
    
    
    147
    
    
    
    (197
    )
    
    
    (153
    )Income tax benefit (expense)
    
    
    30
    
    
    
    (36
    )
    
    
    32
    
    
    
    4(257
    )
    
    
    111
    
    
    
    (165
    )
    
    
    (149
    )Minority interests  net of tax
    
    
    (7
    )
    
    
    (10
    )
    
    
    (29
    )
    
    
    (52
    )Equity in net loss of associated companies  net of tax
    
    
    
    
    
    
    (13
    )
    
    
    (2
    )
    
    
    (38
    )Net earnings (loss) from continuing operations
    
    
    (264
    )
    
    
    88
    
    
    
    (196
    )
    
    
    (239
    )Net earnings (loss) from discontinued operations  net of tax
    
    
    5
    
    
    
    43
    
    
    
    12
    
    
    
    157Net earnings (loss) before cumulative effect
of accounting change
    
    
    (259
    )
    
    
    131
    
    
    
    (184
    )
    
    
    (82
    )Cumulative effect of accounting change  net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12
    )Net earnings (loss)
    
    $
    (259
    )
    
    $
    131
    
    
    $
    (184
    )
    
    $
    (94
    )Basic earnings (loss) per common share- from continuing operations
    
    $
    (0.06
    )
    
    $
    0.02
    
    
    $
    (0.04
    )
    
    $
    (0.06
    )- from discontinued operations
    
    
    0.00
    
    
    
    0.01
    
    
    
    0.00
    
    
    
    0.04Basic earnings (loss) per common share
    
    $
    (0.06
    )
    
    $
    0.03
    
    
    $
    (0.04
    )
    
    $
    (0.02
    )Diluted earnings (loss) per common share- from continuing operations
    
    $
    (0.06
    )
    
    $
    0.02
    
    
    $
    (0.04
    )
    
    $
    (0.06
    )- from discontinued operations
    
    
    0.00
    
    
    
    0.01
    
    
    
    0.00
    
    
    
    0.04Diluted earnings (loss) per common share
    
    $
    (0.06
    )
    
    $
    0.03
    
    
    $
    (0.04
    )
    
    $
    (0.02
    )
 Please refer to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 including the Notes to the
Consolidated Financial Statements (unaudited) and Managements Discussion and Analysis of Financial Condition and
Results of Operations.




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##### 



Page 4 NORTEL NETWORKS CORPORATION
Consolidated Balance Sheets (unaudited) September 30,
    
    
    December 31,(US GAAP; millions of U.S. dollars)
    
    2004
    
    
    2003ASSETSCurrent assetsCash and cash equivalents
    
    $
    3,390
    
    
    $
    3,997Restricted cash and cash equivalents
    
    
    77
    
    
    
    63Accounts receivable  net
    
    
    2,134
    
    
    
    2,505Inventories  net
    
    
    1,503
    
    
    
    1,190Income taxes recoverable
    
    
    53
    
    
    
    90Deferred income taxes  net
    
    
    229
    
    
    
    369Other current assets
    
    
    312
    
    
    
    315Total current assets
    
    
    7,698
    
    
    
    8,529Investments
    
    
    170
    
    
    
    244Plant and equipment  net
    
    
    1,591
    
    
    
    1,656Goodwill
    
    
    2,304
    
    
    
    2,305Intangible assets  net
    
    
    79
    
    
    
    86Deferred income taxes  net
    
    
    3,610
    
    
    
    3,397Other assets
    
    
    337
    
    
    
    374Total assets
    
    $
    15,789
    
    
    $
    16,591LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesNotes payable
    
    $
    13
    
    
    $
    17Trade and other accounts payable
    
    
    703
    
    
    
    861Payroll and benefit-related liabilities
    
    
    507
    
    
    
    764Contractual liabilities
    
    
    636
    
    
    
    530Restructuring liabilities
    
    
    190
    
    
    
    206Other accrued liabilities
    
    
    2,400
    
    
    
    2,505Long-term debt due within one year
    
    
    13
    
    
    
    119Total current liabilities
    
    
    4,462
    
    
    
    5,002Long-term debt
    
    
    3,862
    
    
    
    3,891Deferred income taxes  net
    
    
    170
    
    
    
    191Other liabilities
    
    
    2,938
    
    
    
    2,945Total liabilities
    
    
    11,432
    
    
    
    12,029Minority interests in subsidiary companies
    
    
    619
    
    
    
    617Commitments and contingenciesSHAREHOLDERS EQUITYCommon shares, without par value  Authorized shares: unlimited; Issued and outstanding shares:4,272,671,213 as of September 30, 2004 and 4,166,714,475 as of December 31, 2003
    
    
    33,840
    
    
    
    33,674Additional paid-in capital
    
    
    3,261
    
    
    
    3,341Accumulated deficit
    
    
    (32,716
    )
    
    
    (32,532
    )Accumulated other comprehensive loss
    
    
    (647
    )
    
    
    (538
    )Total shareholders equity
    
    
    3,738
    
    
    
    3,945Total liabilities and shareholders equity
    
    $
    15,789
    
    
    $
    16,591
 Please refer to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2004
including the Notes to the
Consolidated Financial Statements (unaudited) and Managements Discussion and Analysis of
Financial Condition and Results of Operations.




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##### 



Page 5 NORTEL NETWORKS CORPORATION
Consolidated Statements of Cash Flows (unaudited) Nine months ended September 30,(US GAAP; millions of U.S. dollars)
    
    2004
    
    
    2003As restatedCash flows from (used in) operating activitiesNet earnings (loss) from continuing operations
    
    $
    (196
    )
    
    $
    (239
    )Adjustments to reconcile net earnings (loss) from continuing operations to net cash from
(used in) operating activities, net of effects from acquisitions and divestitures of businesses:Amortization and depreciation
    
    
    260
    
    
    
    429Non-cash portion of special charges and related asset write downs
    
    
    
    
    
    
    87Equity in net loss of associated companies
    
    
    2
    
    
    
    38Stock option compensation
    
    
    55
    
    
    
    35Deferred income taxes
    
    
    (12
    )
    
    
    (17
    )Other liabilities
    
    
    190
    
    
    
    94Gain on repurchases of outstanding debt securities
    
    
    
    
    
    
    (4
    )(Gain) loss on sale or write down of investments and businesses
    
    
    (147
    )
    
    
    (8
    )Other  net
    
    
    (288
    )
    
    
    (618
    )Change in operating assets and liabilities
    
    
    (325
    )
    
    
    (82
    )Net cash from (used in) operating activities of continuing operations
    
    
    (461
    )
    
    
    (285
    )Cash flows from (used in) investing activitiesExpenditures for plant and equipment
    
    
    (194
    )
    
    
    (105
    )Proceeds on disposals of plant and equipment
    
    
    10
    
    
    
    22Acquisitions of investments and businesses  net of cash acquired
    
    
    (7
    )
    
    
    (53
    )Proceeds on sale of investments and businesses
    
    
    143
    
    
    
    51Net cash from (used in) investing activities of continuing operations
    
    
    (48
    )
    
    
    (85
    )Cash flows from (used in) financing activitiesIncrease (decrease) in notes payable  net
    
    
    (2
    )
    
    
    (39
    )Repayments of long-term debt
    
    
    (107
    )
    
    
    (267
    )Repayments of capital leases payable
    
    
    (5
    )
    
    
    (9
    )Dividends paid by subsidiaries to minority interests
    
    
    (24
    )
    
    
    (26
    )Issuance of common shares
    
    
    30
    
    
    
    2Net cash from (used in) financing activities of continuing operations
    
    
    (108
    )
    
    
    (339
    )Effect of foreign exchange rate changes on cash and cash equivalents
    
    
    (6
    )
    
    
    97Net cash from (used in) continuing operations
    
    
    (623
    )
    
    
    (612
    )Net cash from (used in) discontinued operations
    
    
    16
    
    
    
    389Net increase (decrease) in cash and cash equivalents
    
    
    (607
    )
    
    
    (223
    )Cash and cash equivalents at beginning of period
    
    
    3,997
    
    
    
    3,790Cash and cash equivalents at end of period
    
    $
    3,390
    
    
    $
    3,567
 Please refer to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 including the Notes to the
Consolidated Financial Statements (unaudited) and Managements Discussion and Analysis of Financial Condition and
Results of Operations.




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##### 



Page 6 Segment revenues The following table summarizes our revenues for the three and nine months ended September 30,
2004 and 2003, respectively, by segment: (US GAAP; millions
    
    For the three months ended September 30,
    
    
    For the nine months ended September 30,of U.S. dollars)
    
    2004
    
    
    2003
    
    
    $ Change
    
    
    % Change
    
    
    2004
    
    
    2003
    
    
    $ Change
    
    
    % ChangeWireless Networks
    
    $
    1,054
    
    
    $
    1,111
    
    
    $
    (57
    )
    
    
    (5
    )
    
    $
    3,560
    
    
    $
    2,953
    
    
    $
    607
    
    
    
    21Enterprise Networks
    
    
    591
    
    
    
    545
    
    
    
    46
    
    
    
    8
    
    
    
    1,703
    
    
    
    1,650
    
    
    
    53
    
    
    
    3Wireline Networks
    
    
    379
    
    
    
    423
    
    
    
    (44
    )
    
    
    (10
    )
    
    
    1,262
    
    
    
    1,433
    
    
    
    (171
    )
    
    
    (12
    )Optical Networks
    
    
    155
    
    
    
    260
    
    
    
    (105
    )
    
    
    (40
    )
    
    
    680
    
    
    
    865
    
    
    
    (185
    )
    
    
    (21
    )Other(a)
    
    
    
    
    
    
    5
    
    
    
    (5
    )
    
    
    (100
    )
    
    
    8
    
    
    
    26
    
    
    
    (18
    )
    
    
    (69
    )Consolidated
    
    $
    2,179
    
    
    $
    2,344
    
    
    $
    (165
    )
    
    
    (7
    )
    
    $
    7,213
    
    
    $
    6,927
    
    
    $
    286
    
    
    
    4
 (a)
    
    Other represented miscellaneous business activities and corporate functions.
 Geographic revenues The following table summarizes our geographic revenues for the three and nine months ended
September 30, 2004 and 2003, respectively, based on the location of the customer: (US GAAP; millions
    
    For the three months ended September 30,
    
    
    For the nine months ended September 30,of U.S. dollars)
    
    2004
    
    
    2003
    
    
    $ Change
    
    
    % Change
    
    
    2004
    
    
    2003
    
    
    $ Change
    
    
    % ChangeUnited States
    
    $
    1,114
    
    
    $
    1,175
    
    
    $
    (61
    )
    
    
    (5
    )
    
    $
    3,653
    
    
    $
    3,483
    
    
    $
    170
    
    
    
    5EMEA(a)
    
    
    581
    
    
    
    545
    
    
    
    36
    
    
    
    7
    
    
    
    1,820
    
    
    
    1,680
    
    
    
    140
    
    
    
    8Canada
    
    
    122
    
    
    
    124
    
    
    
    (2
    )
    
    
    (2
    )
    
    
    413
    
    
    
    389
    
    
    
    24
    
    
    
    6Asia Pacific
    
    
    227
    
    
    
    360
    
    
    
    (133
    )
    
    
    (37
    )
    
    
    904
    
    
    
    992
    
    
    
    (88
    )
    
    
    (9
    )CALA(b)
    
    
    135
    
    
    
    140
    
    
    
    (5
    )
    
    
    (4
    )
    
    
    423
    
    
    
    383
    
    
    
    40
    
    
    
    10Consolidated
    
    $
    2,179
    
    
    $
    2,344
    
    
    $
    (165
    )
    
    
    (7
    )
    
    $
    7,213
    
    
    $
    6,927
    
    
    $
    286
    
    
    
    4
 (a)
    
    The Europe, Middle East and Africa region, or EMEA.(b)
    
    The Caribbean and Latin America region, or CALA.
 Please refer to our Quarterly Report onForm 10-Qfor the quarter ended September 30, 2004
including the Notes to the Consolidated Financial Statements (unaudited) and Managements
Discussion and Analysis of Financial Condition and Results of Operations.




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##### 



Page 7 The table below sets forth selected unaudited results for the third quarter of 2004. Also provided
are the previously announced limited unaudited estimates for the third quarter of 2004. (billions of U.S. dollars, except per share amounts) Q3 2004PreviouslyAnnouncedEstimates
    
    
    As ReportedRevenue
    
    
    2.27
    
    
    
    2.179Gross Margin $
    
    
    0.84
    
    
    
    0.786%
    
    
    37
    %
    
    
    36
    %SG&A/R&D
    
    
    1.05
    
    
    
    1.013(L)EPS Cont. Ops.
    
    
    (0.06
    )
    
    
    (0.06
    )(L)EPS Disc. Ops.
    
    
    0.00
    
    
    
    0.00(L)EPS
    
    
    (0.06
    )
    
    
    (0.06
    )Cash
    
    
    3.4
    
    
    
    3.390
 Please refer to our Quarterly Report onForm 10-Qfor the quarter ended September 30, 2004
including the Notes to the Consolidated Financial Statements (unaudited) and Managements
Discussion and Analysis of Financial Condition and Results of Operations.