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Exhibit 99.1 (NORTEL NETWORKS LOGO) News Release www.nortelnetworks.com FOR IMMEDIATE RELEASE
    
    June 2, 2004For more information:Investors:
    
    Media:(888) 901-7286
    
    Tina Warren(905) 863-6049
    
    (905) 863-4702investor@nortelnetworks.com
    
    tinawarr@nortelnetworks.com
 Nortel Networks Provides Update on Status of Restatements and Related Matters
and Business Performance Restatement Activity Continues; Full Year 2003, Q1 2004 and Restatements will
not be Completed in Second Quarter Business Momentum Continues with Recent Contract Announcements for 3G, VoIP,
Enterprise Network Upgrades TORONTO  Nortel Networks* Corporation [NYSE/TSX: NT] today provided a status
update on its financial restatement process and other related matters and
additional information regarding its business performance. As indicated previously, the Company will provide regular updates to the market
as it is able to do so regarding the restatement process and related matters
and ongoing business performance. This status update is being provided by the
Company and Nortel Networks Limited (NNL), the Companys principal operating
subsidiary, pursuant to the alternative information guidelines of the Ontario
Securities Commission (OSC). These guidelines contemplate that the Company
and NNL will normally provide bi-weekly updates on their affairs until such
time as they are current with their filing obligations under Canadian
securities laws. Today we are providing the status of our restatement process and financial
reporting, said Bill Owens, president and chief executive
officer, Nortel Networks. We are making
progress toward completing the restatement of our financials, but this is a
complex process and there is significant work yet to be done. This has been a
very challenging time for the Company, our investors, customers and employees.
We will get through it in good shape. At the same time, we are encouraged to be
seeing good business momentum and support from our customers with growing
demand for our next generation networking solutions. Over the coming weeks and
months, I am focused on the business model that will make this Company
successful including revenue growth, cash flow and financial accountability. As
we work through the issues, I am encouraged by the business traction we are
seeing. Independent Review, Status of Restatements and Revisions to Financial Results As previously announced, the independent review being undertaken by the Nortel
Networks Audit Committee is continuing and is focused on managements practices
regarding accruals and provisions. This review also includes the second half of
2003 in accordance with the extended assignment announced on April 28, 2004. The Company continues the work to restate the financial results reported in
each of its quarters of 2003 and for earlier periods including 2002 and 2001 as
announced previously. The detailed review is now




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Page 2 underway with respect to the
third and fourth quarters of 2003. The process to complete the full year 2003
and interim 2004 financial statements and the restated financial statements
requires significant time due to the volume and complexity of the work
involved, including the review and confirmation of supporting documentation and
circumstances for thousands of accounting entries in ledgers and sub-ledgers
across geographic regions over a number of years. The Companys Audit
Committee initiated and is directing the independent review and is striving to have the work completed as soon
as practical but it must allow for thoroughness and accuracy. The
Audit Committee is committed
to addressing any and all problems this review identifies. Following completion of the independent review, the Company will work to
complete its full year 2003 and interim 2004 financial statements and the
restated financial statements and to facilitate the completion of the related
audits of full year results as soon as practicable. In light of the work yet to
be done to complete the independent review and financial statements (including
the audit of the annual financial statements by the Companys independent
auditors, Deloitte & Touche LLP), the Company and NNL will not be in a position
to file the relevant financial statements in the second quarter of 2004. The
Company is also not in a position to provide an anticipated filing date as this
date is dependent upon the timing of the completion and results of the
independent review. To assist in completing the restatements as quickly as possible, the Company
has been working with Ernst & Young LLP which has been providing certain
advisory services and additional accounting resources in support of
managements restatement activities. In addition, the Company has also
initiated work with other outside consultants to undertake a review and
assessment of the Companys finance organization and processes as well as its
financial systems. These consultations are intended to review and strengthen
the Companys internal processes and controls. Based on the Companys work to date, including the work done since the update
provided on April 28, 2004 related to the planned restatements, and subject to
the limitations described below, the principal impacts of the restatements and
revisions identified to date to the Companys results continue to reflect the
following:  
    
    A reduction of approximately 50 percent in previously announced net earnings for 2003; these amounts will largely be
reported in prior periods, resulting in a reduction in previously reported net losses for such periods including 2002 and
2001;
    
    A reported net loss for the first half of 2003 compared to the previously announced net earnings for that period; the net
income reductions are expected to substantially impact the Companys continuing operations rather than discontinued
operations in the first half of 2003;
    
    No material impact to prior period revenues; and
    
    No material impact to the Companys cash balance as at December 31, 2003. As previously indicated, the Companys work to date with respect to the planned
restatements and revisions and the expected impacts mentioned above are subject
to a number of important limitations, including:  
    
    Expectations as to the impacts continue to be partial and preliminary;
    
    The ongoing work of the Nortel Networks Audit Committee independent review;
    
    The significant work to be done by the Company, including with respect to the detailed
review of the second half of 2003, accounting documentation and reporting systems issues
and the impact of accounting for certain matters, including foreign exchange;
    
    The previously disclosed material weaknesses in the Companys internal controls over
financial reporting; and
    
    The audit of the Nortel Networks financial statements by the Companys independent auditors. In addition, until the Company finalizes its financial statements for the year
2003, subsequent events or information will result in adjustments to certain
estimates used in the preparation of the Companys year




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Page 3 end and/or quarter end
financial statements. At this time, the Company cannot estimate the impact of
any such adjustments on its results of operations or financial position. Please note that the preliminary and partial estimates of the impacts of the
restatements provided above have not been the subject of a review or audit
engagement by Nortel Networks independent auditors, Deloitte & Touche LLP. Update on Q1 2004 Financial Results Due to the ongoing independent review and impact of subsequent events
adjustments, the Company is not in a position at this time to provide any
information regarding first quarter 2004 financial results beyond the
previously announced preliminary unaudited cash balance of
approximately US $3.6 billion as at March 31, 2004. Business Developments The Company continues to see good business momentum reflecting continued
customer support for its strong portfolio of next generation network solutions.
Highlights of some recent announcements include:  
    
    Continued success in the cable multiple system operator (MSO) market
segments with Voice Over IP (VoIP) wins announced with Charter
Communications (USA), Telenet (Belgium) and VTR (Chile);
    
    Advances in 3G wireless solutions  selected as national 3G provider
to Pelephone in Israel for CDMA 2000 1X EV-DO equipment and implemented
UMTS-based 3G services with Orange for the Cannes International Film
Festival;
    
    Gains with service provider voice over packet solutions with a
contract win with Bell South;
    
    Helping enterprises leverage next generation networking solutions to
transform their business including working with the FedEx Institute of
Technology to support the State of Tennessees Workforce of the Future
program and upgrading the China State Tax System in Beijing; and
    
    Launching the Multiservice Provider Edge, a new IP edge networking
solution that will set new standards in IP networking reliability for
service provider networks. Bill Kerr, chief financial officer, Nortel Networks, commented, Our market
momentum continues. Our strong cash position, solutions portfolio and market
position stand the Company in good stead as we work to complete the financial
statements. As we continue to drive our market success going forward, we will
focus on improving efficiency in our business operations and on earnings growth
and cash flow. The Company continues to
expect that the percentage growth in the overall capital spending by
our customers will be in the low single digits in 2004 compared to
2003 and expects to grow its revenues faster than the market. Nortel Networks Limited The financial results of NNL are consolidated into the Companys results. NNLs
financial statements for the applicable periods will also be restated upon the
related restatements of the Companys financial statements. NNLs preferred
shares are publicly traded in Canada. Update on Certain Potential Impacts Debt Securities As previously announced, as a result of the delay in the filing of the 2003
Form 10-K beyond March 30, 2004, the Company and NNL are not in compliance with
their obligations to deliver to relevant parties their filings with the United
States Securities and Exchange Commission (the SEC) under their public debt
indentures. Approximately US$1.8 billion of notes of NNL (or its subsidiaries)
and US$1.8 billion of convertible debt securities of the Company are
outstanding under the indentures. The delay does not result in an automatic
event of default and acceleration of the long-term debt of the Company or NNL.
If the holders of at least 25 percent of the outstanding principal amount of
any relevant series of debt securities provide notice of such non-compliance to
the Company or NNL, as applicable, and the Company or NNL, as applicable, fails
to file and deliver the relevant 2003 Form 10-K within 90 days after such
notice is provided, then the trustee under the indenture or such holders will
have the right to accelerate the maturity of the relevant series of debt
securities. While such notice could have been given




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Page 4 at any time after March 30,
2004, to date neither the Company nor NNL has received any such notice. In
addition, if the required percentage of holders under one series of debt
securities were to give such a notice and, after the 90-day cure period
expired, were to accelerate the maturity of such debt securities, then the
principal amount of each other series of debt securities could, upon 10 days
notice, be accelerated without the lapse of an additional 90-day cure period.
Similar issues arise under the public debt indentures in relation to the
failure by the Company and NNL to deliver to relevant parties their respective
Quarterly Reports on Form 10-Q for the first quarter of 2004. Based upon
inquiries made in connection with the Companys April 28, 2004 press release,
which inquiries have not been updated, the Company believes that approximately
34 percent of the outstanding principal amount of the US$150 million 7.875%
notes due June 2026 issued by a subsidiary of NNL and guaranteed by it are held
by a group of related holders. Other than with respect to that series of debt
securities, based on such inquiries, neither the Company nor NNL is aware of
any holder, or group of related holders or parties, that holds at least 25
percent of the outstanding principal amount of any relevant series of debt
securities. The Company also believes based on such inquiries that
approximately 23 percent of the outstanding principal amount of the US$150
million 7.40% notes due June 2006 issued by NNL are held by a single holder. If an acceleration of the Companys and NNLs debt securities were to occur,
the Company and NNL may be unable to meet their respective payment obligations
with respect to the related indebtedness. In such case, the Company and NNL
would seek alternative financing sources to satisfy such obligations. At
present, neither the Company nor NNL has any agreements or understandings in
place with respect to any such financing. EDC Support Facility As previously announced on May 28, 2004, NNL has obtained a new waiver from
Export Development Canada (EDC) of certain defaults under the EDC
performance-related support facility related to the delay by NNL in meeting its
filing obligations with the SEC and planned restatements. The prior waiver obtained on March 29, 2004 was scheduled to expire on May 29, 2004. The new
waiver will remain in effect until the earliest of certain events, including:  
    
    The date on which both NNL and the Company have filed their
respective 2003 Forms 10-K and First Quarter 2004 Forms 10-Q with the
SEC;
    
    August 30, 2004; or
    
    At the election of EDC and on no less than one and no more than three
business days written notice to NNL, July 30, 2004. During the waiver period, the new waiver maintains the existing uncommitted
support available under the EDC support facility and reclassifies the
previously committed portion of the EDC support facility as uncommitted
support. The EDC support facility provides up to US$750 million in support of
which, prior to the new waiver, US$300 million was for committed support and,
as of May 28, 2004, approximately $105 million of such committed support was
unused. As of May 28, 2004, there was approximately US$328 million of
outstanding support utilized under the EDC support facility. There can be no
assurance that EDC will provide any additional support under the uncommitted
EDC support facility. Notwithstanding the new waiver, the Company and NNL are
providing no assurance that they will file their respective 2003 Forms 10-K and
First Quarter 2004 Forms 10-Q within the waiver period or, if they fail to do
so, that NNL would receive any further waivers or any extensions of the waiver
beyond its scheduled expiry date. If the new waiver were terminated or expired
prior to the filing of such 2003 Forms 10-K and First Quarter 2004 Forms 10-Q,
EDC would have the right at such time to require NNL to cash collateralize the
support outstanding under the EDC facility and to exercise its rights against
the collateral under NNLs related security agreements.




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Page 5 Other Matters Directorships As previously announced, on April 29, 2004, the Board of Directors of each of
the Company and NNL appointed Dr. rer. pol. Manfred Bischoff to serve as a
director of each respective company. In addition, Dr. Bischoff was also
appointed on that date to serve as a member of the respective Audit Committee
of each of the Company and NNL and the Pension Fund Policy Committee of NNL. As previously announced, on May 26, 2004, the Board of Directors of each of the
Company and NNL appointed the Hon. John Manley to serve as a director of each
respective company. On May 21, 2004, each of the Company and NNL received the resignation of Frank
Dunn as a director of each respective company. OSC Management Cease Trade Order On May 31, 2004, the OSC issued a final order prohibiting certain directors,
senior officers and certain current and former employees of the Company and NNL
from trading in the securities of the Company and NNL, which finalized the
temporary order issued on May 17, 2004. This final order will remain in effect
until two full business days following the receipt by the OSC of all filings
required to be made by the Company and NNL pursuant to Ontario securities laws.
Securities commissions in certain other provinces have issued, or will shortly
issue, similar final orders with respect to certain insiders of the Company and
NNL who are residents in those jurisdictions. Annual Shareholders Meeting The Company intends to make an application to the Ontario Superior Court of
Justice for an order extending the time for calling the Companys 2004 Annual
Shareholders Meeting past the statutory deadline of June 30, 2004. The
postponement is being sought because Canadian law requires that the Companys
2003 audited financial statements be placed before the shareholders at the
Annual Shareholders Meeting. Status of Regulatory and Criminal Investigations As previously announced, the SEC and the OSC have commenced investigations in
connection with the Companys previous restatement of its financial results and
the Companys announcements in March 2004. As announced on May 14, 2004, Nortel
Networks received a Federal Grand Jury Subpoena for the production of certain
documents sought in connection with an ongoing criminal investigation being
conducted by the U.S. Attorneys Office for the Northern District of Texas,
Dallas Division. Further, the Royal Canadian Mounted Police has advised the
Company that it is conducting a review of the Companys accounting situation to
determine the need for a criminal investigation. Nortel Networks will continue
to cooperate fully with all authorities in connection with these investigations
and reviews. Status of Civil Proceedings Subsequent to the March 10, 2004 announcement in which Nortel Networks
indicated it was likely that it would need to revise its previously announced
unaudited results for the year ended December 31, 2003, and the results
reported in certain of its quarterly reports for 2003, and to restate its
previously filed financial results for one or more earlier periods, 27 class
action complaints have been filed against Nortel Networks in the Southern
District of New York and one Employee Retirement Income Security Act (ERISA)
class action complaint has been filed against Nortel Networks in the Middle
District of Tennessee (Nashville). The 27 class action complaints variously allege that, in connection with the
comprehensive review and analysis of Nortel Networks assets and liabilities,
the defendants made materially false and misleading statements in violation of
U.S. securities laws. The named defendants in most of the actions also include
Frank Dunn, Douglas Beatty and Michael Gollogly.




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Page 6 The ERISA class action is brought on behalf of the Nortel Networks Long-Term
Investment Plan (the Plan) and the Plan participants and beneficiaries whose
retirement accounts held Nortel Networks common shares from at least December
23, 2003 through and including the date of the complaint. The complaint alleges
that these Plan participants and beneficiaries suffered losses to their
respective Plan retirement accounts due to the defendants breaches of
fiduciary duty. The named defendants are Nortel Networks, Frank Dunn and the
Nortel Networks board of directors (excluding newly appointed board members Dr.
rer. pol. Manfred Bischoff and the Hon. John Manley). The Company will hold a conference call at 8:45 a.m. ET on June 2, 2004 to
discuss todays announcement. To participate, please call the following at least 15 minutes prior to the
start of the event. Teleconference:
    
    
    
    Webcast:North America:
    
    888-211-4395
    
    www.nortelnetworks.com/june2004_updateInternational:
    
    212-231-6007




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Page 7 Replay:(Available one hour after the conference until 11:59 pm ET, June 11, 2004)North America:
    
    800-383-0935
    
    Passcode: 21197426#International:
    
    402-530-5545
    
    Passcode: 21197426#Webcast:
    
    www.nortelnetworks.com/june2004_update
 Nortel Networks is an industry leader and innovator focused on transforming how
the world communicates and exchanges information. The Company is supplying its
service provider and enterprise customers with communications technology and
infrastructure to enable value-added IP data, voice and multimedia services
spanning Wireless Networks, Wireline Networks, Enterprise Networks, and Optical
Networks. As a global company, Nortel Networks does business in more than 150
countries. More information about Nortel Networks can be found on the Web at
www.nortelnetworks.com or www.nortelnetworks.com/media_center. 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 Nortel Networks independent review
and planned restatement of its previously announced or filed financial results;
the impact of the management changes announced on April 28, 2004; the impact
of the inability to meet Nortel Networks filing obligations on support
facilities and public debt obligations; the sufficiency of Nortel Networks
restructuring activities, including the potential for higher actual costs to be
incurred in connection with restructuring actions compared to the estimated
costs of such actions; continued reductions in spending by Nortel Networks
customers; fluctuations in Nortel Networks operating results and general
industry, economic and market conditions and growth rates; the communication by
Nortel Networks auditors of the existence of material weaknesses in internal
control; Nortel Networks ability to recruit and retain qualified employees;
fluctuations in Nortel Networks cash flow, level of outstanding debt and
current debt ratings; the use of cash collateral to support Nortel Networks
normal course business activities; the dependence on Nortel Networks
subsidiaries for funding; the impact of Nortel Networks defined benefit plans
and deferred tax assets on results of operations and Nortel Networks cash
flows; Nortel Networks dependence on new product development and its ability to
predict market demand for particular products; Nortel Networks 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 in the telecommunications industry; changes in regulation of
the Internet; the impact of the credit risks of Nortel Networks 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 of Nortel Networks purchase contracts; the impact of Nortel Networks
supply and outsourcing contracts that contain delivery and installation
provisions, which, if not met, could result in the payment of substantial
penalties or liquidated damages; the future success of Nortel Networks
strategic alliances; and the adverse resolution of litigation, investigations,
intellectual property disputes and similar matters. For additional information
with respect to certain of these and other factors, see the most recent Form
10-Q/A and Form 10-K/A filed by Nortel Networks with the United States
Securities and Exchange Commission. Unless otherwise required by applicable
securities laws, Nortel Networks 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 Networks, the Nortel Networks logo, the Globemark and Business Without
Boundaries are trademarks of Nortel Networks.