Nortel Completes 1st Flextronics Transfer

TORONTO -- Nortel Networks (NYSE:NT)(TSX:NT) today announced that it has completed as scheduled the transfer of certain optical design operations and related assets in Ottawa, Ontario and Monkstown, Northern Ireland to Flextronics (Nasdaq:FLEX) as part of the larger transaction contemplatedby the agreement and offer announced by the two companies onJune 29, 2004.

"This is a milestone for both companies as we take our growing relationship to a new level," said Sue Spradley, president, Global Operations, Nortel Networks. "With Flextronics now focusing on product cost reduction and fast-tracking the development of new features related to our well-established optical products, Nortel Networks will be better positioned to concentrate on next-generation optical architectures, products and solutions -- areas where we believe we can gain the most competitive advantage."

"We are happy to officially welcome this world-class design group with broad experience in telecommunications and optical networks to Flextronics," said Michael Marks, chief executive officer, Flextronics. "We believe hardware design, software design and manufacturing are converging, which makes the addition of the Nortel Networks design group an excellent fit with our strategy of providing the lowest total cost solutions to customers in each of the market segments that we serve."

As previously announced, the balance of the divestiture, whereby Nortel Networks will sell to Flextronics certain manufacturing operations and related assets, is anticipated to close in the first half of 2005, subject to completion of the required information and consultation processes with the relevant employee representatives.

Nortel Networks Ltd.

Flextronics Corp.