TORONTO -- Nortel Networks Corporation (NYSE:NT)(TSX:NT) today reported results for the fourth quarter and audited results for the year 2004 prepared in accordance with United States generally accepted accounting principles in U.S. dollars.

Today's announcements serve as a status update by the Company and its principal operating subsidiary Nortel Networks Limited ("NNL"), pursuant to the alternative 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.

Fourth Quarter 2004 Results

Revenues were $2.62 billion for the fourth quarter of 2004 compared to $3.27 billion for the fourth quarter of 2003 and $2.18 billion for the third quarter of 2004. The Company reported net earnings in the fourth quarter of 2004 of $133 million, or $0.03 per common share on a diluted basis, compared to a net earnings of $528 million, or $0.12 per common share on a diluted basis, in the fourth quarter of 2003 and net loss of $259 million, or $0.06 per common share on a diluted basis, in the third quarter of 2004.

Net earnings in the fourth quarter of 2004 included $37 million of net earnings from discontinued operations; special charges of $81 million related to restructuring activities; and a benefit of approximately $134 million primarily related to customer financing recovery and settlements.

"I am proud of the progress we made during the past year, delivering solid performance in our core businesses through extremely unique and challenging circumstances," said Bill Owens, vice-chairman and chief executive officer, Nortel. "Our message is clear: Nortel is Playing to Win. In the past year, we've stabilized the business and laid the groundwork to move forward with velocity. We've taken steps to ensure ethics, integrity and transparency in our financial reporting, strengthened our world-class leadership team by recruiting new talent, and are speeding solutions to market through a partnerships and alliances strategy, while focusing on emerging markets and opportunities."

Nortel Networks Ltd.