Nortel Lowers Q1 Outlook

TORONTO -- Nortel NetworksCorporation(a) (NYSE:NT)(TSE:NT.) today announced that its results forthe first quarter of 2001 are anticipated to be below the Company'spreviously stated expectations. Nortel Networks now expects revenues in the range of US$6.1billion to US$6.2 billion and a loss per share from operations (b) inthe range of US$0.10 to US$0.12 for the quarter. This is below theCompany's previous estimates of US$6.3 billion of revenue and loss pershare from operations(b) of US$0.04 provided on February 15, 2001.

"We continue to feel the impact of the economic downturn in theUnited States and are now seeing customers globally assess its effecton their businesses," said John Roth, president and chief executiveofficer, Nortel Networks. "Reduced and/or deferred capital spendingand increased pricing pressure are resulting in lower overallrevenues, particularly in the United States."

Nortel Networks has made significant reductions in its employeebase and adjusted its supply chain to reflect the current economicenvironment. The Company has substantially completed the employeerelated actions announced on February 15, 2001. The full benefit ofthese reductions is expected to impact the second quarter of 2001.However, due to the market environment, the Company is planningfurther reductions and now expects an aggregate net reduction, by midyear 2001, of approximately 15,000 from the number of employees atDecember 31, 2000. Nortel Networks expects to tightly adhere to itscost reduction and business realignment initiatives while drivingfurther improvements in productivity and efficiency despite adifficult economic environment.

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