Nortel Networks Creates High Performance Optical Components Business Unit To Drive Internet Leadership Through Disruptive Optical Technologies and A First Mover Advantage In High Performance Optical Components

TORONTO - Nortel Networks* [NYSE/TSE: NT] announced that it will bring its various optical components businesses together to create a global high performance optical components powerhouse. The new business entity, named High Performance Optical Components Solutions, will serve both Nortel Networks industry leading optical Internet capabilities and the optical networking market at large. Barbara Callaghan has been appointed president of the new business unit. "Nortel Networks is redefining high performance optical components at web speed", said Clarence Chandran, president, Service Provider and Carrier Group, Nortel Networks. "By bringing our global optical components skills and capabilities together, we will drive new disruptive optical technologies to market even faster, redefining the heart of the high performance Internet."

High Performance Optical Components Solutions will bring together approximately 6,000 Nortel Networks employees, located primarily in Harlow, United Kingdom; Paignton, United Kingdom; Ottawa, Ontario, Canada; and Research Triangle Park, North Carolina. It will also have a global presence with worldwide sales offices. Formerly organized along different lines of business within Nortel Networks, these groups will now focus on a single charter: redefining the Internet through industry leadership in high performance optical components.

"We are redefining our optical components business model to deliver the most powerful, leading edge technology in the market," said Barbara Callaghan. "It will enable us to more fully leverage our recently announced acquisitions of Xros, a provider of fully photonic switching solutions, and CoreTek, a developer of tunable lasers and next generation tunable optical components to redefine the Internet as we know it today."

High Performance Optical Components Solutions will combine Nortel Networks existing optical components group with other areas of excellence, including activities in high-speed modules and integrated circuit design and development. The new business will design and develop high performance optical components, such as lasers, high-bandwidth receivers, and microelectronic components, including transmit and receive modules and semiconductor chips that perform a variety of system functions at the heart of optical Internet and networking systems. It will operate as a supplier to the optical networking industry, serving network providers including Nortel Networks and others.

The High Performance Optical Components Solutions design team will bring leadership capabilities in integrating multiple functions onto a single chip or module, and in designing optical components that increase the capacity and performance of optical Internet systems. The team also includes technologists who are developing new manufacturing and processing techniques and exploring new semiconductor materials that enable the design of components that will drive next-generation optical Internet systems.

Nortel Networks has announced US$660 million worth of investments in optical networking to triple production capabilities this year to meet the booming demand for its Optical Internet solutions. These investments are expected to create approximately 8,400 jobs in manufacturing, engineering, supply chain management, and customer service in Canada, the U.K., and the U.S.

Nortel Networks is a global leader in telephony, data, eBusiness, and wireless solutions for the Internet. The Company had 1999 U.S. GAAP revenues of US$21.3 billion and serves carrier, service provider and enterprise customers globally. Today, Nortel Networks is creating a high-performance Internet that is more reliable and faster than ever before. It is redefining the economics and quality of networking and the Internet through Unified Networks* that promise a new era of collaboration, communications and commerce. Visit us at www.nortelnetworks.com.

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 impact of price and product competition; the dependence on new product development; the impact of rapid technological and market change; the ability of Nortel Networks to make acquisitions and/or integrate the operations and technologies of acquired businesses in an effective manner; general industry and market conditions and growth rates; international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of consolidations in the telecommunications industry, the uncertainties of the Internet; stock market volatility; the ability of Nortel Networks to recruit and retain qualified employees; and the impact of increased provision of customer financing by Nortel Networks. For additional information with respect to certain of these and other factors, see the reports filed by Nortel Networks with the United States Securities and Exchange Commission. 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.

*Nortel Networks, the Nortel Networks logo, the Globemark, Unified Networks, and How the world shares ideas are trademarks of Nortel Networks.

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