Nortel Announces Short-Term Priorities to Build Shareholder Value

Toronto (ots/PRNewswire) -

- Over US$1.5 Billion in Targeted Operating Margin Expansion from
Business Transformation Activities; Integrity Renewal and Growth
Imperatives are Cornerstone of Plan

Nortel(x) (NYSE: NT; TSX: NT) today provided additional details on
its short-term priorities to build shareholder value that include a
focus on Business Transformation, Integrity Renewal and Growth
Imperatives. Most notably, Nortel is targeting operating margin
expansion in excess of US$1.5 billion in 2008, including US$200
million in cost savings from the previously initiated finance
transformation.

"Execution against these priorities will strengthen the foundation
we are laying for a rejuvenated Nortel," said Mike Zafirovski, Nortel
president and CEO. "We embarked on this marathon in December 2005
when we initiated the first phase of this plan. We're making steady
progress and our goal is to realize the full impact of our actions in
2008."

The company's Business Transformation plan is focused on
simplifying Nortel's business, improving quality, reducing direct and
indirect costs, and generating new revenues. It is designed to
address the company's biggest operational challenges and comprises
six key areas: Services, Supply Chain Effectiveness, Revenue
Stimulation (including Sales and Pricing), R&D Effectiveness, General
and Administrative Effectiveness, Organization & Workforce
Effectiveness. The Business Transformation teams consist of
top-performing employees specifically chosen to lead and support the
efforts. These activities will be further supported by implementation
of the Six Sigma quality programs and broad employee engagement
initiatives.

With respect to Integrity Renewal, the company remains focused on
effective governance, improving internal controls and ensuring the
integrity of financial information. Nortel is enhancing its
Compliance function to ensure overall, company wide compliance with
applicable laws, regulations and company policies and the company has
also created new leadership values and asked employees to reconfirm
their commitment to ethical behavior in alignment with the company's
Code of Ethical Business Conduct.

"We have an unwavering commitment to be among the top companies in
the world in corporate governance and business and financial
controls," said Zafirovski.

As part of Nortel's Growth Imperatives, Zafirovski has set a goal
to pursue market opportunities where the company can achieve a
leadership position and at least 20 percent market share. "We have a
team currently conducting a full review of our R&D priorities and
investment areas," he said. For example, Nortel has made decisions to
significantly increase investment in the promising areas of IMS,
WiMAX, and IPTV, redirect funding from its services edge router and
sell certain assets of its Blade Server Switch Business Unit. "You
can expect us to continue to share details related to R&D
prioritization as decisions are made over the next 12 months," said
Zafirovski.

"I have found a deep sense of commitment and pride from the Nortel
employees and I am excited by the energy generated for our business
transformation, integrity renewal and growth activities," Zafirovski
added. "I also want to thank our employees and leadership team who
have continued to execute with a passionate customer focus in the
face of many challenges over the last several years."

"Now we are ready for the next phase," said Zafirovski. "We have
our sights squarely focused on restoring Nortel's credibility,
executing a winning plan for profitable growth and recapturing
Nortel's position as a great company."

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. Our next-generation technologies, for both service
providers and enterprises, span access and core networks, support
multimedia and business-critical applications, and help eliminate
today's barriers to efficiency, speed and performance by simplifying
networks and connecting people with information. 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 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 previously
announced two 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
previously announced two 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 previous two
restatements of its financial statements and related events; 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 previous two restatements of its financial statements;
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.

(x) Nortel, the Nortel logo and the Globemark are trademarks of
Nortel Networks.

TORONTO, March 10 /PRNewswire/ --

ots Originaltext: Nortel Networks
Im Internet recherchierbar: http://www.presseportal.de

Contact:
For further information: Patricia Vernon, +1-(905)-863-1035,
patricve@nortel.com; Jay Barta, +1-(972)-685-2381, jbarta@nortel.com