Nortel Networks

Nortel Provides Status Update

    Toronto, Canada (ots/PRNewswire) - Nortel Networks(x) Corporation (NYSE: NT TSX:NT)  and its principal operating subsidiary, Nortel Networks Limited ("NNL"),  today provided a status update pursuant to the alternate 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.


    Change in Accounting Policy

    The Company is continuing work on the current restatement of its and  NNL's historical financial results as first announced on March 10, 2006,  which work is primarily focused on an accounting policy change with respect  to revenue for contracts with provisions for multiple deliverables that was  historically accounted for under the percentage-of-completion methodology  in accordance with American Institute of Certified Public Accountants  Statement of Position 81-1, "Accounting for Performance of Construction- Type and Certain Production-Type Contracts" ("SOP 81-1"). Through the  restatement and on a prospective basis, these complex contractual  arrangements will be accounted for in accordance with Emerging Issues Task  Force Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables" (" EITF 00-21"). EITF 00-21 requires an analysis of individual contract deliverables such as hardware, software and/or services and their fair  value in order to determine the time pattern of revenue recognition, in  contrast to the percentage-of-completion estimation methodology under SOP 81-1.

    As a result of this continuing work, the Company expects that in addition to the revenue adjustments identified in the March 10, 2006 press  release, additional revenue recognized in prior periods will be restated  and deferred to future periods. The Company will be in a position to  determine the amounts of additional revenue deferral and periods impacted  upon completion of this work.

    Filing of Financial Statements

    The Company continues to expect to file its and NNL's annual reports on  Form 10-K for the year ended December 31, 2005 and their corresponding  filings under Canadian securities laws by April 30, 2006.

    Annual Shareholders' Meeting

    The board of directors of Nortel Networks Corporation called an annual  and special meeting of shareholders (the "Meeting") to be held on June 29,  2006 in Toronto, Ontario. The board of directors set the close of business  on Wednesday, May 10, 2006 as the record date for determining the  shareholders of Nortel Networks Corporation entitled to receive notice of  the Meeting. Details of the location, time and agenda for the Meeting will  be included in Nortel Networks Corporation's proxy circular and proxy  statement.

    The Company and NNL reported that there have been no material developments in the matters reported in the March 10, 2006 press release  and their status update of March 23, 2006, except for the Company's press  release "Nortel Announces OSC Management Cease Trade Order" dated March 27,  2006 and the matters described above.

    The Company's and NNL's next bi-weekly status update is expected to be  released during the week of April 17, 2006.

    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 For the latest Nortel news, visit

    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 or information under applicable  securities legislation. 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. Although Nortel believes expectations reflected in such forward- looking statements are reasonable based upon the assumptions in this press  release, they 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 recently announced restatement 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; 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 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 recently announced restatement 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 Nortel's securities  filings with the SEC, which have not been updated to reflect each of these  risks and uncertainties and which include financial information that Nortel  announced on March 10, 2006 cannot be relied upon.  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.

ots Originaltext: Nortel Networks
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