March 28, 2007 08:01 ET

Nortel and Microsoft to Deliver Carrier-Hosted Unified Communications

New Converged Office Innovations Benefit Service Providers and Businesses Alike

ORLANDO, FLORIDA--(CCNMatthews - March 28, 2007) - Nortel(1) (TSX:NT)(NYSE:NT) and Microsoft Corp. are expanding their efforts to drive the widespread adoption of unified communications among businesses around the world. Building on their existing Innovative Communications Alliance (ICA), the companies plan to offer solutions that will enable service providers to deliver comprehensive unified communications services to small and medium business (SMBs) and enterprises.

Nortel and Microsoft's alliance will allow carriers to host unified business communication and collaboration services for their business customers, including e-mail, instant messaging, VoIP, click-to-call, video conferencing and other multimedia services. This will enable carriers to derive greater value from their existing network investments and resources, while allowing SMBs and enterprises to benefit from unified communications without bearing the burden of purchasing, installing and managing additional network infrastructure.

Nortel announced the companies' new carrier-hosted converged office solution in Orlando at Inform 2007, Nortel's carrier user group conference that is attended by more than 300 global carrier customers.

"We are experiencing a dynamic restructuring of the communication landscape, transforming it from disparate computing and infrastructure networks to an integrated communication experience," said Tom Valovic, IDC's program director for VOIP Infrastructure. "New and collaborative business models involving both IT and telecom suppliers will be a major element in this transformation going forward. The Nortel-Microsoft alliance and its extension into the carrier space is an excellent example of a market response targeting new business opportunities presented by this changing landscape."

"As one of the world's leading providers to both carriers and enterprises, Nortel is uniquely positioned to identify and address challenges that cross the boundary between public and private networks," said Richard Lowe, president, Carrier Networks, Nortel. "With these carrier solutions we can deliver feature-rich unified communications to small and medium-sized enterprises through the carrier partners that host their voice services today. Together Nortel and Microsoft are eliminating challenges that SMBs face when sourcing professional grade communications, by stripping the burden of complexity from the enterprise back office."

Building on their existing Innovative Communications Alliance, Nortel will integrate its Communication Server 2000 (CS 2000) softswitch with the Microsoft® Solution for Hosted Messaging and Collaboration, which incorporates hosted versions of Microsoft's familiar, world-class enterprise products Microsoft Exchange, Microsoft Office Live Communications Server and Windows® SharePoint® Services. In addition, Nortel will provide a full range of convergence integration services from the Nortel Global Services portfolio that can accelerate and expedite all stages of a unified communications deployment to unify disparate modes of communication into a seamless model integrating business processes at the applications level. The companies intend to begin field trials the second half of 2007 with general availability planned by the end of the year.

The integrated solutions will enable service providers to offer subscribers combined telephony, e-mail, collaboration, presence, instant messaging and desktop services. With these hosted communications solutions offerings, service providers will be able to equip SMB and enterprise workers with advanced tools such as click- to-call, as well as traditional voice communications and in/outbound dialing from their Microsoft Office Communicator desktop client. In addition, workers will be able to place and receive calls and access their calendars and contacts from their PC or desktop telephone whether they are sitting at their desk, working from their home office or from their hotel rooms while traveling.

"In the anywhere, anytime world we live in, business users want easy access to all of their communications tools, regardless of location, type of device or time of day," said Michael O'Hara, general manager, Communications Sector, Microsoft. "Microsoft and Nortel, working with service providers around the globe, are making it easier than ever for businesses of all sizes to get the rich communications services they want, wherever they want, whenever they want them."

Nortel's Global Services portfolio is focused on smoothing the transition to a secure, optimally converged network environment. Nortel's services lifecycle approach is focused on easing the transition to a secure, optimally converged network environment by mitigating technology and network complexity and optimizing performance throughout the lifecycle of the network.

About Nortel

Nortel is a recognized leader in delivering communications capabilities that make the promise of Business Made Simple a reality for our customers. Our next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate today's barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel does business in more than 150 countries around the world. For more information, visit Nortel on the Web at For the latest Nortel news, visit

Certain statements in this press release may contain words such as "could", "expects", "may", "anticipates", "believes", "intends", "estimates", "targets", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities legislation. These statements are based on Nortel's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which Nortel operates. These statements are subject to important assumptions, risks and uncertainties, which are difficult to predict and the actual outcome may be materially different. Further, actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following
(i) risks and uncertainties relating to Nortel's restatements and related matters including: Nortel's most recent restatement and two previous restatements of its financial statements and related events; the negative impact on Nortel and NNL of their most recent restatement and delay in filing their financial statements and related periodic reports; legal judgments, fines, penalties or settlements, or any substantial regulatory fines or other penalties or sanctions, related to the ongoing regulatory and criminal investigations of Nortel in the U.S. and Canada; any significant pending civil litigation actions not encompassed by Nortel's proposed class action settlement; any substantial cash payment and/or significant dilution of Nortel's existing equity positions resulting from the approval of its proposed class action settlement; any unsuccessful remediation of Nortel's material weaknesses in internal control over financial reporting resulting in an inability to report Nortel's results of operations and financial condition accurately and in a timely manner; the time required to implement Nortel's remedial measures; Nortel's inability to access, in its current form, its shelf registration filed with the United States Securities and Exchange Commission (SEC), and Nortel's below investment grade credit rating and any further adverse effect on its credit rating due to Nortel's restatements of its financial statements; any adverse affect on Nortel's business and market price of its publicly traded securities arising from continuing negative publicity related to Nortel's restatements; Nortel's potential inability to attract or retain the personnel necessary to achieve its business objectives; any breach by Nortel of the continued listing requirements of the NYSE or TSX causing the NYSE and/or the TSX to commence suspension or delisting procedures;
(ii) risks and uncertainties relating to Nortel's business including: yearly and quarterly fluctuations of Nortel's operating results; reduced demand and pricing pressures for its products due to global economic conditions, significant competition, competitive pricing practice, cautious capital spending by customers, increased industry consolidation, rapidly changing technologies, evolving industry standards, frequent new product introductions and short product life cycles, and other trends and industry characteristics affecting the telecommunications industry; the sufficiency of recently announced restructuring actions, including the potential for higher actual costs to be incurred in connection with these restructuring actions compared to the estimated costs of such actions and the ability to achieve the targeted cost savings and reductions of Nortel's unfunded pension liability deficit; any material and adverse affects on Nortel's performance if its expectations regarding market demand for particular products prove to be wrong or because of certain barriers in its efforts to expand internationally; any reduction in Nortel's operating results and any related volatility in the market price of its publicly traded securities arising from any decline in its gross margin, or fluctuations in foreign currency exchange rates; any negative developments associated with Nortel's supply contract and contract manufacturing agreements including as a result of using a sole supplier for key optical networking solutions components, and any defects or errors in Nortel's current or planned products; any negative impact to Nortel of its failure to achieve its business transformation objective; additional valuation allowances for all or a portion of its deferred tax assets; Nortel's failure to protect its intellectual property rights, or any adverse judgments or settlements arising out of disputes regarding intellectual property; changes in regulation of the Internet and/or other aspects of the industry; Nortel's failure to successfully operate or integrate its strategic acquisitions, or failure to consummate or succeed with its strategic alliances; any negative effect of Nortel's failure to evolve adequately its financial and managerial control and reporting systems and processes, manage and grow its business, or create an effective risk management strategy; and
(iii) risks and uncertainties relating to Nortel's liquidity, financing arrangements and capital including: the impact of Nortel's most recent restatement and two previous restatements of its financial statements; any inability of Nortel to manage cash flow fluctuations to fund working capital requirements or achieve its business objectives in a timely manner or obtain additional sources of funding; high levels of debt, limitations on Nortel capitalizing on business opportunities because of support facility covenants, or on obtaining additional secured debt pursuant to the provisions of indentures governing certain of Nortel's public debt issues and the provisions of its support facility; any increase of restricted cash requirements for Nortel if it is unable to secure alternative support for obligations arising from certain normal course business activities, or any inability of Nortel's subsidiaries to provide it with sufficient funding; any negative effect to Nortel of the need to make larger defined benefit plans contributions in the future or exposure to customer credit risks or inability of customers to fulfill payment obligations under customer financing arrangements; any negative impact on Nortel's ability to make future acquisitions, raise capital, issue debt and retain employees arising from stock price volatility and further declines in the market price of Nortel's publicly traded securities, or the share consolidation resulting in a lower total market capitalization or adverse effect on the liquidity of Nortel's common shares. For additional information with respect to certain of these and other factors, see Nortel's Annual Report on Form10-K/A, Quarterly Reports on Form 10-Q and other securities filings with the SEC. Unless otherwise required by applicable securities laws, Nortel disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

(1)Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks.

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