To Drive Internet Leadership Through Disruptive Optical Technologies and 
    A First Mover Advantage In High Performance Optical Components

    TORONTO, May 5 /CNW/ - Nortel Networks (NYSE/TSE: NT) today 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.



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For further information: North American Media: Jeff Ferry, Nortel 
Networks, (703) 712-8339, jferry@nortelnetworks.com; Paul Goyette, Nortel 
Networks, (613) 763-1420, goyette1@nortelnetworks.com; Europe, Middle East 
and Africa Media: Will Cairns, Nortel Networks, +44 1628 438 031,
wcairns@nortelnetworks.com; Investor Relations, Nortel Networks,
888-901-7286, (905) 863-6049, investor@nortelnetworks.com;
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