##### 



Exhibit 99.1 News Release
    
    (NORTEL NETWORKS LOGO)
   www.nortelnetworks.com FOR IMMEDIATE RELEASE
    
    August 19, 2004For more information:Media:
    
    Investors:Tina Warren
    
    (888) 901-7286(905) 863-4702
    
    (905) 863-6049tinawarr@nortelnetworks.com
    
    investor@nortelnetworks.com
 Nortel Networks Provides Status Update
Sets Strategy to Fully Leverage Network Convergence  
    
    Estimated Unaudited Results for Q1, Q2 2004
    
    Continued Expectation that Revenue Growth will Outpace the Market
    
    New Streamlined Organization to Provide Seamless Approach to Converged Networks of the Future and
Focused Employee Reductions to Reset Business Model
    
    Update on Audit Committee Independent Review; Personnel Actions; Restatement Update TORONTO  Nortel Networks * Corporation [NYSE/TSX:NT] today announced
estimated limited preliminary unaudited financial results for the first and
second quarters of 2004, prepared in accordance with United States generally
accepted accounting principles, and new strategic initiatives to reset its
business model. These initiatives include a new streamlined organizational
structure to improve alignment with enterprise and carrier customers,
which is intended to enable the Company to build on its market leadership in
developing the converged networks of the future and improve business
efficiency and operating cost performance in an increasingly competitive
market. The streamlined organizational structure will lead to an approximate 10
per cent workforce reduction. Nortel Networks also provided an update regarding the progress of the Audit
Committees continuing independent review, including the termination for cause
of seven finance executives. The Company also provided an update on the
progress of its restatements and revisions to prior period financial results. Todays announcements serve as a status update by the Company and its principal
operating subsidiary Nortel Networks Limited (NNL) pursuant to the
alternative information guidelines of the Ontario Securities Commission. 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.




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Page 2 We are pleased to be able to communicate preliminary first and second quarter
2004 results and details of a new streamlined organization, said Bill Owens,
president and chief executive officer, Nortel Networks. With the restatement
moving toward completion, we are focusing our full attention on driving the
business forward with a focus on costs, cash and revenues as overall
strategic imperatives. With our proven
strengths in high performance high reliability networks, supported by our new
simplified organization, we are well-positioned to deliver the secure, reliable
converged networks customers are demanding to increase their own
competitiveness. Estimated Limited Preliminary Unaudited Results for the First and Second
Quarters of 2004 Estimated unaudited revenues for the first six months of 2004 were
approximately US$5.1 billion, with approximately US$2.5 billion in the first
quarter and US$2.6 billion in the second quarter. Estimated unaudited net
earnings per share in the first half of 2004 were US$0.00 to US$0.02, with US$0.00 to US$0.01 in the first quarter and US$0.00 to US$0.01 in
the second quarter, in each case on a fully diluted basis. Estimated unaudited net earnings in the second quarter of 2004 included a
benefit of approximately US$0.02 per share on a fully diluted basis related to
a customer contract settlement in South America. Estimated unaudited revenues by segment on a percentage of revenue basis for
the first and second quarters of 2004 were: Percentage of RevenueQ1 2004
    
    Q2 2004Wireless Networks
    
    
    51
    %
    
    
    51
    %Enterprise Networks
    
    
    21
    %
    
    
    22
    %Wireline Networks
    
    
    18
    %
    
    
    17
    %Optical Networks
    
    
    10
    %
    
    
    10
    %
 The revenue performance reflects our customers continued investment in our
solutions as a provider of choice in building secure converged networks and
their ongoing confidence in Nortel Networks, said Owens. Recent business highlights
are included in the annex to this press release. Gross Margin Gross margin for the first
six months of 2004 is estimated at approximately
US$2.2 billion, or approximately 43 percent of revenues, with approximately
US$1.1 billion in each of the first and second quarters. Margins in the second
quarter reflect lower margins related to initial wireless deployments and the
mix of wireless revenues in the quarter.




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Page 3 Expenses Selling, general and administrative expenses (SG&A) and research and
development expenses combined are estimated at approximately US$2.1 billion
for the first six months of 2004 and were approximately equal in the first and
second quarters. Cash Cash balance at the end of the second quarter of 2004 was approximately US$3.7
billion and was approximately US$3.6 billion at the end of the first quarter of
2004. Timing of Final Unaudited Results These estimated limited preliminary unaudited results are subject to change and
to a number of important limitations described below under Status of
Restatement and Filing of Financial Statements. The final unaudited results
for the first and second quarters of 2004 will be available upon the filing of
the quarterly reports for such periods, which the Company expects to file by
the end of the third quarter of 2004. Strategic Plan Nortel Networks believes significant opportunities for growth exist across the
marketplace and particularly in emerging markets such as China and India as
customers evolve their networks to high performance converged networks
underpinned by high security and reliability. Security and reliability have
always been fundamental requirements for service provider networks of all types
and they are increasingly important to governments, defense interests and
enterprises around the world. Nortel Networks is driving its strategy with the
aim of growing market share and to leverage its strength in high performance,
high reliability networks in opportunities such as those mentioned above. Existing and new competitors are aggressively positioning themselves to capture
significant growth opportunities. At the same time, the estimated unaudited
financial results for the first and second quarters of 2004 announced today
indicate that the Companys business operations are not achieving the targeted
operating cost performance. We have put in place a strategic plan that recognizes industry dynamics and
the evolution of the converged network, and leverages our acknowledged
strengths in high reliability networks and strong customer loyalty. The plan
further reflects our renewed commitment to best corporate practices and ethical
conduct, said Owens. Building on this foundation, it is our intention to be
optimally positioned to maximize strategic opportunities as they
arise. Our ability to be proactive will be fueled by a dedicated emphasis on costs, cash and
revenues. The impact of the strategic
plan outlined today, and detailed in the annex to this press release, will lead to an anticipated focused reduction in employees of
approximately 3,500, or an estimated 10 per cent of the workforce. This
workforce reduction is expected to be substantially completed by year-end, and
will be subject to completion of the appropriate information and consultation
processes with the relevant employee representatives in certain jurisdictions,
as required by law. The Company currently estimates costs of approximately
US$300 million to US$400 million in connection with this work plan and is
targeting annualized cost savings of approximately US$450 million to US$500
million. The details of




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Page 4 this work plan and the timing of the financial statement impacts are expected
to be finalized by the end of the third quarter of 2004. In an increasingly cost-competitive environment, we are taking the steps
necessary to continue to grow market share and, together with the actions
announced today, are taking the important steps to improve our profitability
and cash generation, said Owens. I am saddened that these actions will
necessitate a decrease in our workforce. Nortel Networks employees have
demonstrated remarkable loyalty during this challenging period. I recognize the
impact these measures will have on these fine people who have served Nortel
Networks well. The principal components of the strategic plan are:  
    
    a renewed commitment to best corporate practices and ethical
conduct, including through the establishment of a chief ethics and compliance officer;
    
    a streamlined organizational structure to reflect alignment with carrier converged networks;
    
    an increased focus on the enterprise market and customers;
    
    optimized research and development programs for secure, 5 9s reliable converged networks;
    
    the establishment of a chief strategy officer to drive
partnerships, new markets and acquisitions;
    
    the establishment of a chief marketing officer to drive overall
marketing strategy;
    
    the strategic review of embedded services to assess opportunities in
professional services business; and
    
    a distinct focus on government and defense customer segments. Details of the strategic plan
are included in the annex to the press release. Business Outlook The Company continues to expect the market will grow in the low to mid-single
digits in 2004 compared to 2003, and that its revenues will grow faster than
the market. Nortel Networks expects, through the implementation of its
strategic plan, to reduce its operating expenses to 35 percent of revenues or
lower on an annualized basis in 2005. Considering the impacts of the strategic
plan and higher costs associated with initial customer deployments in emerging
markets, the Company expects gross margins in the range of 40 to 44 percent of
revenues through 2005.




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Page 5 Status of Audit Committee Independent Review; Personnel Actions The independent review by the Nortel Networks Audit Committee is continuing.
The Audit Committee expects to complete that portion of its inquiry which
affects the Companys and NNLs ability to finalize and file their audited
financial statements for the year 2003 in sufficient time to enable the Company
and NNL to file such financial statements by the end of the third quarter of
2004. The Audit Committee anticipates that there will be additional work done
on remedial measures, internal controls, and improvements to processes beyond
the filing of the Companys and NNLs audited 2003 financial statements. The Audit Committee review has focused on the establishment, timing of, support
for and release of accruals and provisions. Based on the Committees work to
date, the Company has found that a significant number of accruals and
provisions were established and/or released in 2002 and 2003 that were not in
accordance with applicable generally accepted accounting principles. The Audit
Committees objective is to arrive at a full understanding of the facts and
circumstances that gave rise to these errors before audited financial
statements for the year 2003 are finalized and filed. As previously announced on
April 28, 2004, the Company terminated for cause each of its
former president and chief executive officer, chief financial officer and
controller. Today, the Company announced that seven individuals with
significant responsibilities for financial reporting at the line of business
and regional levels have also been terminated for cause. Four of these individuals
had previously been placed on paid leaves of absence, as announced on April 28,
2004. In making these and the previous determinations, the Board of Directors found that each
of these ten individuals had primary, or substantial, responsibility for the
Companys financial reporting; that if not aware, each ought to have been aware
that the establishment and/or release to income of such accruals and provisions
were not in accordance with applicable generally accepted accounting
principles; and that the improper application of generally accepted accounting
principles with respect to these accruals and provisions misstated the
Companys financial statements. The Company will demand repayment by these
individuals of payments made under Company bonus plans in respect of 2003, and
will take further additional action with respect to these individuals, if
appropriate. The Board of Directors reiterated its commitment to continue to fully cooperate
with the ongoing investigations of these matters by the regulatory and law
enforcement authorities in both Canada and the United States. As previously announced, the Company has retained outside consultants to assist
it in reviewing and assessing its finance organization and the development and
implementation of appropriate processes and financial systems. The Audit
Committees independent review is also focused on remedial measures,
strengthening internal controls and improvements to processes. Together, the
recommendations from these assessments, when completed and presented to the
Board of Directors, are intended to strengthen internal controls over financial
reporting and address the material weaknesses in internal controls previously
identified by the Companys independent auditors. The Company will provide
additional details as to these recommendations in connection with the filing of
its financial statements for 2003 and for the first and second quarters of 2004
and related periodic reports. Status of Restatement and Filing of Financial Statements The Company and NNL continue to dedicate significant resources to the process
to complete their financial statements as soon as practicable. As previously
announced, the Company and NNL continue to work on the restatement and
revisions of their financial results for each fiscal quarter in 2003 and for




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Page 6 2002 and 2001, and the preparation of their financial statements for the full
year 2003 and the first and second quarters of 2004. As previously announced, the Company and NNL expect to file, by the end of the
third quarter of 2004, financial statements for the year 2003 and the first and
second quarters of 2004 and related periodic reports, and follow thereafter, as
soon as practicable, with any required amendments to periodic reports for prior
periods. Based on the Companys work to date, it currently does not expect changes to
the principal estimated impacts from such restatements and revisions to the
Companys results previously outlined in the Companys press release dated
July 13, 2004, except for the following:  
    
    approximately three-quarters of the reduction in 2003 net earnings
identified to date impacts the first half of 2003 (up from two-thirds
previously estimated), with the remaining approximate one-quarter
reduction impact to the second half of 2003. The Companys work to date with respect to the restatements and revisions and
the principal estimated impacts mentioned above and the Companys expectations
as to timing of the filing of financial statements and related periodic reports
remain subject to a number of important limitations, including:  
    
    the principal impacts are estimated impacts which have been
identified by the Company based on the work done to date and are not
projections of the final total impacts. As such, the principal estimated
impacts continue to be preliminary, partial and subject to change;
    
    the ongoing work of the Nortel Networks Audit Committee independent
review;
    
    the ongoing work to be done by the Company related to the
restatements and revisions and the impact of accounting for certain
other matters, including foreign exchange;
    
    the previously disclosed material weaknesses in Nortel Networks
internal controls over financial reporting;
    
    the review or audit of the Nortel Networks financial statements by
Nortel Networks independent auditors, Deloitte & Touche LLP, as the
above estimates of the principal impacts of the restatements identified
to date have not been the subject of a review or audit engagement by
Nortel Networks independent auditors; and
    
    the final determination of the impact of adjustments arising from
subsequent events on the Companys results of operation or financial
position. 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.




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Page 7 Other Matters EDC Support Facility NNL is currently in discussions with Export Development Canada (EDC) to
obtain a new waiver under the EDC performance-related support facility (the
EDC Support Facility) of certain defaults related to the delay by the Company
and NNL in filing their respective Q2 2004 Quarterly Reports on
Form 10-Q (the Q2 Reports), and to extend the current waiver, scheduled to
expire on August 30, 2004, related to the delayed filings of their 2003 Annual
Reports on Form 10-K and Q1 2004 Quarterly Reports on Form 10-Q (the Prior
Period Reports and, together with the Q2 Reports, the Reports), in each case
with the U.S. Securities and Exchange Commission, the trustees under Nortel
Networks public debt indentures and EDC. The existing waiver also applies to
certain other breaches that have arisen or may arise under the EDC Support
Facility relating to the delayed filings and the restatement of the Companys
and NNLs financial results. If NNL fails to obtain a waiver relating to the Q2 Reports by August 24, 2004,
or an extension of the current waiver by August 30, 2004, EDC would have the
right at such times to require NNL to cash collateralize the support
outstanding under the EDC Support Facility and to exercise its rights against
the collateral under NNLs related security agreements. There can be no
assurance that NNL will receive any new waivers or any extension of the
existing waiver from EDC. The EDC Support Facility provides up to US$750 million in support, all
presently on an uncommitted basis. As of August 15, 2004, there was
approximately US$274 million of outstanding support utilized under the EDC
Support Facility. Status of Legal Proceedings A proposed class proceeding has been commenced before the Ontario Superior
Court of Justice against the Company, NNL and various current and former
officers and directors claiming damages of Cdn. $250 million for alleged
breaches of trust and fiduciary duty, oppressive conduct and misappropriation
of corporate assets and trust property in respect of the payment of cash
bonuses to executives, officers and employees in 2003 and 2004 under the Nortel
Networks Return to Profitability bonus program. The claim alleges that the
bonus payments were paid based on falsely reported financial performance and
diverted the profits of the Company and NNL that ought to have been shared with
the Companys shareholders. The claim also seeks an order under the Canada
Business Corporations Act directing that an investigation be made respecting
these bonus payments. Except as to the matters described above, the Company and NNL reported that
there have been no other material developments in the matters reported in their
status updates of June 2, 2004, June 29, 2004, July 13, 2004, July 27, 2004 and
August 10, 2004 and the Companys press release Nortel Networks Updates Status
of RCMP Review dated August 16, 2004. The Company will hold a conference call at 8:30 a.m. ET on August 19, 2004 to
discuss todays announcement.




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Page 8 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/q1q2earnings_2004International:
    
    212-231-6007Replay:(Available one hour after the conference until 10:30 a.m. ET, September 1, 2004)North America:
    
    800-383-0935
    
    Passcode:
    
    21205523#International:
    
    402-530-5545
    
    Passcode:
    
    21205523#Webcast:
    
    www.nortelnetworks.com/q1q2earnings_2004
 *************************** 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 or revision of its previously announced or filed
financial results; the impact of the management changes announced on April 28,
2004 and August 19, 2004; the impact of the inability to meet Nortel Networks
filing obligations on support facilities and public debt obligations; the risk
that the transaction with Flextronics announced on June 29, 2004 may not be
completed on the expected schedule or at all; adjustments to expected proceeds
from the transaction with Flextronics resulting from post-closing asset
valuations and post-closing indemnity payments; the ability of Flextronics to
exercise certain contractual put rights with respect to certain inventory and
equipment; 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 controls; 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.




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Page 9 ANNEX Strategic Plan The principal components of the strategic plan are: Renewed Commitment to Best Corporate Practices and Ethical Conduct  
    
    Nortel Networks places the highest emphasis on exemplary corporate
and individual conduct by its officers and employees. As a specific
action, the position of chief ethics and compliance officer, reporting
to both the chairman of the board and the president and chief executive
officer, has been created and recruitment is taking place. Streamlined Organizational Structure to Reflect Alignment with Carrier
Converged Networks  
    
    Effective October 1, 2004, the Companys wireless, wireline and
optical businesses will be combined into a single carrier networks
organization supported by customer-facing solutions teams. This
structure is the evolution of the network transformation to converged
networks that is designed to facilitate customer solutions across all
types of network access and attached devices. This carrier-focused
structure enhances the customer alignment and is expected to eliminate
internal redundancies and reduce costs.
    
    Pascal Debon will assume the role of president, carrier networks. He
is currently the Companys president, wireless networks.
    
    Sue Spradley will assume the role of president, global operations
reporting to the president, carrier networks. In addition, Spradley
will report to the president and chief executive officer regarding
specific new partnership initiatives. She is currently president,
wireline networks. Increased Focus on Enterprise Market and Customers  
    
    Recognizing the opportunity that the global enterprise market
represents, Nortel Networks will intensify its focus on solutions in
voice, data applications and convergence, as well as seek to exploit its
solutions and technology leadership in session initiated protocol (SIP)
and voice and data over IP. Malcolm Collins will continue as president,
enterprise networks reporting to the president and chief executive
officer. Optimize Research and Development Programs for Secure Converged Networks  
    
    The transformed network is built on a reliable, secure IP
infrastructure and delivers multimedia broadband services across wired
and wireless technologies. Nortel Networks R&D program will focus on
common converged core capabilities, continued packetization of voice and
multimedia IP services, the powerful services edge capability to realize
simplification of customer network operations and broadband access
technologies, including wireless and wireline. One particular area of
focus will be providing enhanced network security to ensure the level of
reliability and performance that has traditionally existed in carrier
networks. Nortel Networks will continue to




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Page 10  take an industry leadership role in delivering security and 5 9s or
better reliability in all networks.
    
    Brian McFadden, currently president, optical networks, will assume the
role of chief technology officer and will also have responsibility for
ensuring Nortel Networks global leadership in networks security. He will
report to the president and chief executive officer. Greg Mumford, who
remains chief technology officer until October 1, 2004, will retire from
Nortel Networks in early 2005 and in the interim will act as special
advisor to the president and chief executive officer. Elevation of Corporate Strategy Function to Drive Partnerships, New Markets and
Acquisitions  
    
    The Company intends to capitalize more aggressively on its current
strengths and opportunities as well as identify select areas for growth
and expansion such as partnerships, new markets and acquisitions. To
drive the development and execution of an overall corporate strategy,
effective immediately, Dion Joannou will assume the position of chief
strategy officer, reporting to the president and chief executive
officer. Previously, Joannou was president, Caribbean and Latin America
(CALA). Martha Bejar will assume the role of president, CALA and will
report to the president and chief executive officer. Elevation of Corporate Marketing Function to Drive Overall Marketing Strategy  
    
    As industry consolidation takes place and competition becomes more
forceful, it is key that the Companys marketing activities be aligned
with this reality. The new role of chief marketing officer, reporting to
the president and chief executive officer, has been created and
recruitment is taking place. This role will be accountable for
developing and overseeing the execution of an overall global corporate
marketing and branding strategy. Strategic Review of Embedded Services to Assess Opportunities in Professional
Services Business  
    
    As more Nortel Networks customers converge their networks and look to
outsource operations and maintenance so they can focus on their own
areas of core competency, they want to be supported by a partner that
can deliver a converged network of high security and reliability.
Chahram Bolouri, who is currently president, global operations, will
assume the role of president, Nortel Networks services reporting to the
president and chief executive officer, with specific responsibility for
analyzing the Companys services offerings and building a strategy for
leveraging this future growth opportunity. Distinct Focus on Government and Defense Customer Segments  
    
    Nortel Networks is committed to continued leadership in delivering
secure technologies and reliability, of particular importance to
governments and defense interests worldwide. In recognition, Chuck
Saffell, president, federal solutions, will report directly to the
president and chief executive officer, reflecting Nortel Networks
specific emphasis on developing its government and defense customer
businesses globally. Except as otherwise noted, all appointments will be effective October 1, 2004.




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Page 11 In addition, to better leverage Nortel Networks world-class IT solution sets
and to raise the profile of these solutions with senior decision makers across
the Companys customer and stakeholder groups, Albert Hitchcock, chief
information officer will report to the president and chief executive officer. The regional presidents remain Robert Mao, Greater China, John Giamatteo, Asia
Pacific and Steve Pusey, Europe, Middle East and Africa (EMEA), with the
exception of the appointment of Martha Bejar, president, CALA, as noted above.
All regional presidents will report directly to the president and chief
executive officer. Consistent with Nortel Networks goal to drive business
growth, the Company intends to increase investment in regional sales
activities. Recent Business Highlights Market Inroads  
    
    Sustained success in 3G CDMA with a two-year supply
agreement announced for 1xEV-DO with Verizon Wireless;  
    
    First commercial UMTS (Universal Mobile Technology
System) launched in North America with AT&T Wireless
using Nortel Networks core and radio access UMTS
solutions;  
    
    VoIP leadership position confirmed by industry analysts
and recent contracts with a four-year frame agreement
for Warid Telecoms next generation network for
Pakistan, building on announcements with Verizon for a
nationwide network evolution to VoIP and Computer
Sciences Corporation (CSC) Australias deployment of a
VoIP and data networking solution earlier this year;  
    
    Continued momentum with the Multimedia Communications
portfolio with announcements with service provider and
enterprise customers including Telecommunications
Services Trinidad and Tobago (TSTT), Smitcoms and
University Hospitals of Geneva;  
    
    Broadband Networking momentum was supported by both
customer and product advancements including a series of
optical wins and deployments in healthcare (Orlando
Regional Healthcare, New England Healthcare), education
(University of Pennsylvania), service providers (Bell
Canada, North Dakota Telephone), and cable operators
(R); Portfolio Enhancements  
    
    Portfolio enhancements were announced to build on our
leadership in delivering next generation optical
networking technology with the Common Photonic Layer, a
new DWDM (dense wavelength division multiplexing)
optical transport platform designed to enable enterprise
customers, cable operators and other service providers
to cost-effectively leverage optical networking
technology and scalability enhancements across the
Optical Cross Connect HDX switching platform;  
    
    Multiservice Provider Edge Switch launched to provide
carrier grade reliability at the edge of the network;




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Page 12 Business Partnerships and Efficiency  
    
    Moving towards completion of a five-year plan to divest
substantially all manufacturing activities with the
signing of agreements with Flextronics, thereby moving
towards a 100-percent variable cost structure for
manufacturing;  
    
    Announced SIP (Session Initiation Protocol)-based
interoperability initiatives with Texas Instruments
Incorporated, Uniden American Corporation, Polycom and
i3micro for SIP clients, VoIP gateways and IP phones;  
    
    Memorandum of Understanding signed for cooperation in
development and manufacture of certain TD-SCDMA (Time
Division-Synchronous Code Division Multiple Access)
products with China Putian Corporation;  
    
    Strategic alliance with Avici Systems announced under
which Nortel Networks will integrate, sell and support
Avicis carrier-class core routers.