##### 



Exhibit 99.1
 
 News Release
  www.nortel.com
 March 10, 2006For more information:Media
    
    InvestorsPatricia Vernon
    
    (888) 901-7286(905) 863-1035
    
    (905) 863-6049patricve@nortel.com
    
    investor@nortel.com
 NORTEL TO DELAY FILING OF ITS 2005 ANNUAL REPORTS UNTIL END OF APRIL 2006 AND
RESTATE CERTAIN PRIOR PERIOD RESULTS
 NORTEL ANNOUNCES PRELIMINARY UNAUDITED Q4 AND YEAR 2005 RESULTS
 
    
    Financial restatements principally due to revenue incorrectly recognized in prior
periods that should have been deferred
    
    Preliminary unaudited Q4 2005 results include revenues of $2.9 billion, net loss of
$2.2 billion, including a $2.5 billion litigation expense, and cash balance of $3.0
billion
    
    Preliminary unaudited year 2005 results include revenues of $10.8 billion and net loss
of $2.4 billion




---



##### 



Preliminary Unaudited Fourth Quarter 2005 Results
    Breakdown of Fourth Quarter 2005 Revenues
  Gross margin
  Selling, general and administrative (SG&A)
  Research and development (R&D)




---



##### 



Other income (expense)  net
  Tax
  Cash
 .
 Preliminary Unaudited Year 2005 Results
  Outlook(a)
   (a)
    
    The Companys financial outlook contains forward-looking information and, as
such, is based on certain assumptions, and is subject to important risks and uncertainties (which are summarized in italics at the
end of this press release) that could cause actual results or events to differ materially from
this outlook.
 Restatements




---



##### 



Potential Impacts
 Credit Facility; EDC Support Facility; Debt Securities
     Annual Shareholders Meeting




---



##### 



Revenue Momentum
     Leading Next-Generation Solutions




---



##### 



New Strategic Relationships
  About
Nortel
 www.nortel.com www.nortel.com/news
 Certain statements in this press release may contain words such as could, expects, may,
anticipates, believes, intends, estimates, plans, envisions, seeks and other similar
language and are considered forward-looking statements. These statements are based on Nortels
current expectations, estimates, forecasts and projections about the operating environment,
economies and markets in which Nortel operates. These statements are subject to important
assumptions, risks and uncertainties, which are difficult to predict and the actual outcome may be
materially different.
 Nortel has made various assumptions in the preparation of its financial outlook in this press
release, including the following company specific assumptions: no further negative impact to
Nortels results of operations, financial condition and liquidity arising from the announcement
today of the restatement and Nortels two previous restatements of its financial
results; Nortels prices increasing at or above the rate of price increases for similar products in
geographic regions in which Nortel sells its products; increase in sales to Nortels enterprise
customers and wireless service provider customers in the Asia Pacific region as a result of
Nortels joint venture with LG Electronics Inc.; anticipated growth in sales to enterprise
customers including the full year impact to Nortels revenues from its acquisition of PEC
Solutions, Inc., (now Nortel Government Solutions Incorporated); improvement in Nortels product
costs due to favorable supplier pricing substantially offset by higher costs associated with
initial customer deployments in emerging markets; cost reductions resulting from the completion of
Nortels significant financial restatement exercise related to
its two previous restatements and 2004 restructuring plan; a moderate increase in costs over 2005 related to
investments in the finance organization and remedial measures related to Nortels material
weaknesses in internal controls; increased employee costs relative to expected cost of living
adjustments and employee bonuses offset by a significant reduction in executive recruitment and
severance costs incurred in 2005; and the effective execution of Nortels strategy. Nortel has
also made certain macroeconomic and general industry assumptions in the preparation of its
financial guidance including: a modest growth rate in the gross domestic product of global
economies in the range of 3.2% which is unchanged from the growth rate in 2005; global service
provider capital expenditures in 2006 reflecting flat to low single digit growth as compared to low
double digit growth in 2005; a general increase in demand for broadband access, data traffic and
wireless infrastructure and services in emerging markets with the rate of growth in developed
markets beginning to slow; and a moderate impact as a result of expected industry consolidation
among service providers in various geographic regions, particularly in North America and EMEA. The
above assumptions, although considered reasonable by Nortel at the date of this press release, may
prove to be inaccurate and consequently Nortels actual results could differ materially from its
expectations set out in this press release.
 Further, actual results or events could differ materially from those contemplated in
forward-looking statements as a result of the following (i) risks and uncertainties relating to
Nortels restatements and related matters including: Nortels restatement announced in this press
release and two previous restatements of its financial statements and
related events and that the previously filed financial statements of
Nortel and NNL and related audit reports should not be relied upon; the negative
impact on Nortel and NNL of their announced restatement and delay in filing their financial
statements and related periodic reports causing them to breach their public debt indentures and
obligations under their credit facilities with the possibility that the holders of their public
debt or NNLs lenders would seek to accelerate the maturity of that debt; and causing a breach of
NNLs support facility with EDC with the possibility that EDC would refuse to issue additional
support under the facility, terminate its commitments under the facility or require NNL to cash
collateralize all existing support; legal judgments, fines, penalties or settlements, or any
substantial regulatory fines or other penalties or sanctions, related to the ongoing regulatory and
criminal investigations of Nortel in the U.S. and Canada; any significant pending civil litigation
actions not encompassed by Nortels proposed class action settlement; any substantial cash payment
and/or significant dilution of Nortels existing equity positions resulting from the finalization
and approval of its proposed class action settlement, or if such proposed class action settlement
is not finalized, any larger settlements or awards of damages in respect of such class actions;
any unsuccessful remediation of Nortels material weaknesses in internal control over financial
reporting resulting in an inability to report Nortels results of operations and financial
condition accurately and in a timely manner; the time required to implement Nortels remedial
measures; Nortels inability to access, in its current form, its shelf registration filed with the
United States Securities and Exchange Commission (SEC), and Nortels below investment grade credit
rating and any further adverse effect on its credit rating due to Nortels restatement of its
financial statements announced in this press release; any adverse affect on Nortels business and
market price of its publicly traded securities arising from continuing negative publicity related
to Nortels restatements; Nortels potential inability to attract or retain the personnel necessary
to achieve its business objectives; any breach by Nortel of the continued listing requirements of
the NYSE or TSX causing the NYSE and/or the TSX to commence suspension or delisting procedures; any
default in Nortels filing obligations extending beyond two months from the date hereof (May 9,
2006) causing any Canadian securities regulatory authority to impose an order to cease all trading
in Nortels securities within the applicable jurisdiction or to impose such an order sooner if
Nortel fails to comply with the alternate information guidelines of such regulatory authorities;
(ii) risks and uncertainties relating to Nortels business including: yearly and quarterly
fluctuations of Nortels operating results; reduced demand and pricing pressures for its products
due to global economic conditions, significant competition, competitive pricing practice, cautious
capital spending by customers, increased industry consolidation, rapidly changing technologies,
evolving industry standards, frequent new product introductions and short product life cycles, and
other trends and industry characteristics affecting the telecommunications industry; any material
and adverse affects on Nortels performance if its expectations regarding market demand for
particular products prove to be wrong or because of certain barriers in its efforts to expand
internationally; any reduction in Nortels operating results and any related volatility in its
market price of its publicly traded securities arising from any decline in its gross margin, or
fluctuations in foreign currency exchange rates; any negative developments associated with Nortels
supply contract and contract manufacturing agreements including as a result of using a sole
supplier for key optical networking solutions components, and any defects or errors in Nortels
current or planned products; any negative impact to Nortel of its failure to achieve its business
transformation objectives; restrictions on how Nortel and its president and chief executive officer
conduct its business arising from a settlement with Motorola Inc.; additional valuation allowances
for all or a portion of




---



##### 



its deferred tax assets; Nortels failure to protect its intellectual property rights, or any
adverse judgments or settlements arising out of disputes regarding intellectual property; changes
in regulation of the Internet and/or other aspects of the industry; Nortels failure to
successfully operate or integrate its strategic acquisitions, or failure to consummate or succeed
with its strategic alliances; any negative affect of Nortels failure to evolve adequately its
financial and managerial control and reporting systems and processes, manage and grow its business,
or create an effective risk management strategy; and (iii) risks and uncertainties relating to
Nortels liquidity, financing arrangements and capital including: the impact of Nortels
restatement announced in this press release and two previous restatements of its financial
statements; any acceleration under their public debt indentures and
credit facilities, which may result in Nortel and NNL being unable to
meet their respective payment obligations; any inability of Nortel to manage cash flow fluctuations to fund working capital
requirements or achieve its business objectives in a timely manner or obtain additional sources of
funding; high levels of debt, limitations on Nortel capitalizing on business opportunities because
of credit facility covenants, or on obtaining additional secured debt pursuant to the provisions of
indentures governing certain of Nortels public debt issues and the provisions of its credit
facilities; any increase of restricted cash requirements for Nortel if it is unable to secure
alternative support for obligations arising from certain normal course business activities, or any
inability of Nortels subsidiaries to provide it with sufficient funding; any negative affect to
Nortel of the need to make larger defined benefit plans contributions in the future or exposure to
customer credit risks or inability of customers to fulfill payment obligations under customer
financing arrangements; any negative impact on Nortels ability to make future acquisitions, raise
capital, issue debt and retain employees arising from stock price volatility and further declines
in Nortels market price of its publicly traded securities, or any future share consolidation
resulting in a lower total market capitalization or adverse affect on the liquidity of Nortels
common shares. 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.
    Friday, March 10
  Teleconference:
    
    Webcast:North America: 1-888-211-4395
    
    http://www.nortel.com/teleconferenceInternational: 1-212-231-6007
 April 6
 North America:
    
    1-800-383-0935
    
    Passcode: 21285361#International:
    
    1-402-530-5545
    
    Passcode: 21285361#Webcast:
    
    http://www.nortel.com/teleconference




---



##### 



NORTEL NETWORKS CORPORATION
Consolidated Statements of Operations
(Preliminary and Unaudited)
(Millions of U.S. dollars, except per share amounts)
 Three months endedDecember 31,
    
    
    Three months ended December 31,2005(a)
    
    
    2004
    
    


    
    
    2004(As previously
    
    
    (Anticipated
    
    
    (Preliminaryreported)
    
    
    restatement
    
    
    anticipatedadjustments)(a)
    
    
    restated)(a)Revenues
    
    $
    2,947
    
    
    $
    2,615
    
    
    $
    (30
    )
    
    $
    2,585Cost of revenues
    
    
    1,672
    
    
    
    1,431
    
    
    
    (16
    )
    
    
    1,415Gross profit
    
    
    1,275
    
    
    
    1,184
    
    
    
    (14
    )
    
    
    1,170Selling, general and administrative expense
    
    
    674
    
    
    
    542
    
    
    
    (14
    )
    
    
    528Research and development expense
    
    
    450
    
    
    
    494
    
    
    
    (3
    )
    
    
    491Amortization of intangibles
    
    
    6
    
    
    
    3
    
    
    
    
    
    
    
    3Special charges
    
    
    28
    
    
    
    81
    
    
    
    (5
    )
    
    
    76(Gain) loss on sale of businesses and assets
    
    
    11
    
    
    
    16
    
    
    
    (4
    )
    
    
    12Shareholder litigation settlement expense
    
    
    2,474
    
    
    
    
    
    
    
    
    
    
    
    Operating earnings (loss)
    
    
    (2,368
    )
    
    
    48
    
    
    
    12
    
    
    
    60Other income  net
    
    
    112
    
    
    
    119
    
    
    
    (38
    )
    
    
    81Interest expenseLong-term debt
    
    
    (48
    )
    
    
    (61
    )
    
    
    
    
    
    
    (61
    )Other
    
    
    (4
    )
    
    
    8
    
    
    
    
    
    
    
    8Earnings (loss) from continuing operations before income taxes,
minority interests and equity in
net earnings (loss) of associated companies
    
    
    (2,308
    )
    
    
    114
    
    
    
    (26
    )
    
    
    88Income tax benefit (expense)
    
    
    101
    
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )(2,207
    )
    
    
    111
    
    
    
    (26
    )
    
    
    85Minority interests  net of tax
    
    
    (2
    )
    
    
    (17
    )
    
    
    
    
    
    
    (17
    )Equity in net earnings (loss) of associated companies  net of tax
    
    
    1
    
    
    
    2
    
    
    
    
    
    
    
    2Net earnings (loss) from continuing operations
    
    
    (2,208
    )
    
    
    96
    
    
    
    (26
    )
    
    
    70Net earnings from discontinued operations  net of tax
    
    
    0.00
    
    
    
    37
    
    
    
    0.00
    
    
    
    37Net earnings (loss)
    
    
    (2,208
    )
    
    
    133
    
    
    
    (26
    )
    
    
    107Basic earnings (loss) per common share from continuing operations
    
    $
    (0.51
    )
    
    $
    0.02
    
    
    $
    (0.01
    )
    
    $
    0.01 from discontinued operations
    
    
    0.00
    
    
    
    0.01
    
    
    
    0.00
    
    
    
    0.01Basic earnings (loss) per common share
    
    $
    (0.51
    )
    
    $
    0.03
    
    
    $
    (0.01
    )
    
    $
    0.02Diluted earnings (loss) per common share from continuing operations
    
    $
    (0.51
    )
    
    $
    0.02
    
    
    $
    (0.01
    )
    
    $
    0.01 from discontinued operations
    
    
    0.00
    
    
    
    0.01
    
    
    
    0.00
    
    
    
    0.01Diluted earnings (loss) per common share
    
    $
    (0.51
    )
    
    $
    0.03
    

    $
    (0.01
    )
    
    $
    0.02
 (a)
    
    These results are preliminary and unaudited and reflect known restatement adjustments.
These results are subject to change as a result of any adjustments arising from the
restatement process, subsequent events and the completion of the audit of the financial
statements by Nortels independent auditors.




---



##### 



NORTEL NETWORKS CORPORATION
Consolidated Statements of Operations
(Preliminary and Unaudited)
(Millions of U.S. dollars, except per share amounts)
 Twelve months endedDecember 31,
    
    
    Twelve months ended December 31,2005(a)
    
    
    2004
    
    


    
    
    2004(As previously
    
    
    (Anticipated
    
    
    (Preliminaryreported)
    
    
    restatement
    
    
    anticipatedadjustments)(a)
    
    
    restated)(a)Revenues
    
    $
    10,829
    
    
    $
    9,828
    
    
    $
    (77
    )
    
    $
    9,751Cost of revenues
    
    
    6,370
    
    
    
    5,750
    
    
    
    (17
    )
    
    
    5,733Gross profit
    
    
    4,459
    
    
    
    4,078
    
    
    
    (60
    )
    
    
    4,018Selling, general and administrative expense
    
    
    2,403
    
    
    
    2,138
    
    
    
    (11
    )
    
    
    2,127Research and development expense
    
    
    1,852
    
    
    
    1,959
    
    
    
    (2
    )
    
    
    1,957Amortization of intangibles
    
    
    16
    
    
    
    10
    
    
    
    
    
    
    
    10Special charges
    
    
    173
    
    
    
    180
    
    
    
    (2
    )
    
    
    178(Gain) loss on sale of businesses and assets
    
    
    46
    
    
    
    (98
    )
    
    
    (3
    )
    
    
    (101
    )Shareholder litigation settlement expense
    
    
    2,474
    
    
    
    
    
    
    
    
    
    
    
    Operating earnings (loss)
    
    
    (2,505
    )
    
    
    (111
    )
    
    
    (42
    )
    
    
    (153
    )Other income  net
    
    
    298
    
    
    
    231
    
    
    
    (51
    )
    
    
    180Interest expenseLong-term debt
    
    
    (204
    )
    
    
    (193
    )
    
    
    
    
    
    
    (193
    )Other
    
    
    (10
    )
    
    
    (10
    )
    
    
    
    
    
    
    (10
    )Earnings (loss) from continuing operations before income taxes,
minority interests and equity in
net earnings (loss) of associated companies
    
    
    (2,421
    )
    
    
    (83
    )
    
    
    (93
    )
    
    
    (176
    )Income tax benefit (expense)
    
    
    52
    
    
    
    29
    
    
    
    
    
    
    
    29(2,369
    )
    
    
    (54
    )
    
    
    (93
    )
    
    
    (147
    )Minority interests  net of tax
    
    
    (48
    )
    
    
    (46
    )
    
    
    
    
    
    
    (46
    )Equity in net earnings (loss) of associated companies  net of tax
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    Net earnings (loss) from continuing operations
    
    
    (2,413
    )
    
    
    (100
    )
    
    
    (93
    )
    
    
    (193
    )Net earnings from discontinued operations  net of tax
    
    
    1
    
    
    
    49
    
    
    
    
    
    
    
    49Net earnings (loss)
    
    
    (2,412
    )
    
    
    (51
    )
    
    
    (93
    )
    
    
    (144
    )Basic earnings (loss) per common share from continuing operations
    
    $
    (0.56
    )
    
    $
    (0.02
    )
    
    $
    (0.02
    )
    
    $
    (0.04
    ) from discontinued operations
    
    
    0.00
    
    
    
    0.01
    
    
    
    0.00
    
    
    
    0.01Basic earnings (loss) per common share
    
    $
    (0.56
    )
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    (0.03
    )Diluted earnings (loss) per common share from continuing operations
    
    $
    (0.56
    )
    
    $
    (0.02
    )
    
    $
    (0.02
    )
    
    $
    (0.04
    ) from discontinued operations
    
    
    0.00
    
    
    
    0.01
    
    
    
    0.00
    
    
    
    0.01Diluted earnings (loss) per common share
    
    $
    (0.56
    )
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    (0.03
    )Cash and cash equivalents
    
    $
    2,952
    
    
    $
    3,686
    
    
    $
    
    
    
    $
    3,686
 (a)
    
    These results are preliminary and unaudited and reflect known restatement adjustments.
These results are subject to change as a result of any adjustments arising from the
restatement process, subsequent events and the completion of the audit of the financial
statements by Nortels independent auditors.




---



##### 



Segment revenues
  Three MonthsEnded December 31,
    
    
    Three Months Ended December 31,2005(a)
    
    
    2004
    
    


    
    
    2004(Anticipated
    
    
    (Preliminary(As previously
    
    
    restatement
    
    
    anticipatedreported)
    
    
    adjustments)(a)
    
    
    restated)(a)RevenuesCarrier Packet Networks
    
    $
    802
    
    
    $
    685
    
    
    $
    (2
    )
    
    $
    683CDMA Networks
    
    
    741
    
    
    
    616
    
    
    
    (15
    )
    
    
    601GSM and UMTS Networks
    
    
    755
    
    
    
    665
    
    
    
    8
    
    
    
    673Enterprise Networks
    
    
    651
    
    
    
    651
    
    
    
    (21
    )
    
    
    630Total reportable segments
    
    
    2,949
    
    
    
    2,617
    
    
    
    (30
    )
    
    
    2,587Other
    
    
    (2
    )
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )Total revenues
    
    $
    2,947
    
    
    $
    2,615
    
    
    $
    (30
    )
    
    $
    2,585
 (a)
    
    These results are based on estimated allocations of revenue and are preliminary and
unaudited and reflect known restatement adjustments. These results are subject to change as a
result of any adjustments arising from the restatement process, subsequent events and the
completion of the audit of the financial statements by Nortels independent auditors.
  Twelve MonthsEnded December 31,
    
    
    Twelve Months Ended December 31,2005(a)
    
    
    2004
    
    


    
    
    2004(Anticipated
    
    
    (Preliminary(As previously
    
    
    restatement
    
    
    anticipatedreported)
    
    
    adjustments)(a)
    
    
    restated)(a)RevenuesCarrier Packet Networks
    
    $
    2,920
    
    
    $
    2,625
    
    
    $
    (1
    )
    
    $
    2,624CDMA Networks
    
    
    2,418
    
    
    
    2,263
    
    
    
    (2
    )
    
    
    2,261GSM and UMTS Networks
    
    
    2,888
    
    
    
    2,575
    
    
    
    (19
    )
    
    
    2,556Enterprise Networks
    
    
    2,599
    
    
    
    2,354
    
    
    
    (55
    )
    
    
    2,299Total reportable segments
    
    
    10,825
    
    
    
    9,817
    
    
    
    (77
    )
    
    
    9,740Other
    
    
    4
    
    
    
    11
    
    
    
    
    
    
    
    11Total revenues
    
    $
    10,829
    
    
    $
    9,828
    
    
    $
    (77
    )
    
    $
    9,751
 (a)
    
    These results are based on estimated allocations of revenue and are preliminary and
unaudited and reflect known restatement adjustments. These results are subject to change as a
result of any adjustments arising from the restatement process, subsequent events and the
completion of the audit of the financial statements by Nortels independent auditors.




---



##### 



Geographic revenues
  Three MonthsEnded December 31,
    
    
    Three Months Ended December 31,2005(a)
    
    
    2004
    
    


    
    
    2004(Anticipated
    
    
    (Preliminary(As previously
    
    
    restatement
    
    
    anticipatedreported)
    
    
    adjustments)(a)
    
    
    restated)(a)RevenuesUnited States
    
    $
    1,410
    
    
    $
    1,180
    
    
    $
    (41
    )
    
    $
    1,139EMEA(b)
    
    
    779
    
    
    
    760
    
    
    
    27
    
    
    
    787Canada
    
    
    145
    
    
    
    155
    
    
    
    (9
    )
    
    
    146Asia Pacific
    
    
    368
    
    
    
    349
    
    
    
    7
    
    
    
    356CALA(c)
    
    
    245
    
    
    
    171
    
    
    
    (14
    )
    
    
    157Consolidated
    
    $
    2,947
    
    
    $
    2,615
    
    
    $
    (30
    )
    
    $
    2,585
 (a)
    
    These results are preliminary and unaudited and reflect known restatement adjustments.
These results are subject to change as a result of any adjustments arising from the
restatement process, subsequent events and the completion of the audit of the financial
statements by Nortels independent auditors.
 (b)
    
    The Europe, Middle East and Africa region, or EMEA.(c)
    
    The Caribbean and Latin America region, or CALA.
   Twelve MonthsEnded December 31,
    
    
    Twelve Months Ended December 31,2005(a)
    
    
    2004
    
    


    
    
    2004(Anticipated
    
    
    (Preliminary(As previously
    
    
    restatement
    
    
    anticipatedreported)
    
    
    adjustments)(a)
    
    
    restated)(a)RevenuesUnited States
    
    $
    5,216
    
    
    $
    4,833
    
    
    $
    (41
    )
    
    $
    4,792EMEA
    
    
    2,768
    
    
    
    2,580
    
    
    
    9
    
    
    
    2,589Canada
    
    
    642
    
    
    
    568
    
    
    
    (39
    )
    
    
    529Asia Pacific
    
    
    1,505
    
    
    
    1,253
    
    
    
    28
    
    
    
    1,281CALA
    
    
    698
    
    
    
    594
    
    
    
    (34
    )
    
    
    560Consolidated
    
    $
    10,829
    
    
    $
    9,828
    
    
    $
    (77
    )
    
    $
    9,751
 (a)
    
    These results are preliminary and unaudited and reflect known restatement adjustments.
These results are subject to change as a result of any adjustments arising from the
restatement process, subsequent events and the completion of the audit of the financial
statements by Nortels independent auditors.