Nortel, IBM Partner on R&D

ARMONK, N.Y. and TORONTO -- Nortel (NYSE: NT)(TSX: NT) and IBM (NYSE: IBM) today announced the signing of an agreement designed to support customized products across a range of market segments. As the first step in this technology, research and services relationship, the companies will establish a Nortel-IBM Joint Development Center in Research Triangle Park, NC to collaborate on the design and development of new products and services.

"This agreement with IBM is a critical component of our strategy to partner for growth," said Bill Owens, Vice Chairman and Chief Executive Officer, Nortel. "Working with IBM, as one of their key partners, is a bold step forward in our efforts to transform our business by reaching an entirely new level of R&D collaboration while reducing our R&D costs, introducing products at a faster pace and serving a broad range of customers more rapidly."

At the Nortel-IBM Joint Development Center, personnel from both companies will:

Nortel expects to utilize IBM engineering and technical services, for a number of projects, all aimed at broadening Nortel end-to-end broadband, Voice over IP, multimedia services and applications and wireless broadband offerings.

"Nortel is a company with a strong history of innovation. Together, we are working to reduce complexity and cost of service delivery while enabling innovation for a new set of on-demand services. This is at the core of what we do," said Bill Zeitler, Senior Vice President and Group Executive, IBM Systems and Technology Group.

Mr. Zeitler said this agreement reinforces IBM's strength and ability to address the Business Performance Transformation Services market opportunity on a wide range of business services across many industries, areas that IBM can address based on its unique portfolio of technology design, system, software and consulting capabilities.

IBM Corp.

Nortel Networks Ltd.