August 30, 2005 09:00 ET

Nortel Teams With Microsoft to Deliver Real-Time Business Communications

TORONTO--(CCNMatthews - Aug 30, 2005) -

Integration of Open, SIP-Based Enterprise Solutions to Deliver Converged Office Solution to the Desktop

Nortel (NYSE:NT) (TSX:NT) today expanded its strategic relationship with Microsoft through integrated technology solutions designed to help simplify the way businesses communicate around the world. The latest cooperative initiative between the two companies will provide collaborative real-time capabilities for businesses through integration of Microsoft Office Communicator 2005 and Office Live Communication Server with Nortel's open, SIP-based communications solution.

The converged solution will provide desktop call control using Microsoft Office Communicator for telephony infrastructures built on Nortel Communication Server 1000. Nortel's open SIP application interface allows customers to build solution sets that meet their business needs with flexibility and simplicity. To provide this functionality, Microsoft Live Communications Server and Office Communicator will be integrated with the industry-leading telephony and flexible IP communications of Nortel Communication Server 1000.

The new Nortel/Microsoft converged office solution will also provide access to critical applications such as Unified Messaging, Contact Center and Self Service via the Nortel Applications Center.

"Providing an easy to use solution for simplifying business communications is a very powerful and valuable tool for the enterprise," said Dr. E. Brent Kelly, senior analyst and partner at Wainhouse Research. "The integrated Nortel and Microsoft solution offers a strategic capability for increasing business competitiveness by driving productivity and improving profit potential."

"Combining the capabilities of Microsoft's Live Communications Server and Microsoft Office Communicator's capabilities with Nortel's IP Telephony represents a win-win scenario for end-users," said Malcolm Collins, president, Enterprise Networks, Nortel. "We are pleased to be working with Microsoft to integrate our open, SIP applications, which are designed to enable customers to drive increased productivity through enhanced access to a multitude of applications and simplified communications. Designed to ignite global commerce, we expect this new solution to open up a world of new opportunities for businesses by providing users with the convenience and flexibility to collaborate through the most effective means available."

"Communications have to be effective, simple to use and provide the flexibility to accommodate a variety of methods for businesses to enable their employees to be more effective," said Zig Serafin, general manager, Microsoft Office Real-Time Collaboration. "Our collaboration with Nortel provides that foundation. Integrating the Microsoft Office Communicator with business-grade communication capabilities from Nortel will provide more effective real-time collaboration capabilities for our customers."

The Nortel/Microsoft converged office solution builds on a longstanding relationship between the two companies.

This solution is designed to enable end-users to exploit the personal computer-based Microsoft Office Communicator client in concert with a Nortel desktop phone for business communications. It will also enable them to determine when colleagues are available and employ an integrated Instant Messaging capability, all from the Communicator client interface. In addition, end-users will be able to access communications directly from the desktop phone or from Communicator.

With the Nortel/Microsoft converged office solution, end-users will be able to:

-- initiate telephone calls through enterprise phones directly from Communicator 2005.

-- see pop-up notifications for incoming calls and access phone features (accept, transfer or divert calls, or add others to the conversation) via Communicator 2005.

-- forward incoming calls automatically based on location.

-- 'twin' desk phones to the Office Communicator client, enabling calls to desktop phone numbers to ring and be answered using Communicator.

-- conduct multimedia communications sessions with Live Communications Server and Communicator including voice, instant messaging, presence, data sharing, and video.

-- benefit from the business-class reliability, communications continuity and resilience of Nortel Communication Server 1000.

This Nortel/Microsoft converged office solution is expected to be available for customer beta trials in September 2005, with general availability later in 2005.

Leveraging the leadership positions of both companies in developing SIP applications in an open, standards-compliant environment, the Nortel/Microsoft converged office solution demonstrates both companies' commitment to providing the best collaboration solutions without compromise.

Nortel is the only company that has deployed more than 50 million enterprise telephony lines and 50 million Ethernet ports. Nortel's award-winning IP multimedia solutions serve customers of many sizes in many industries.

About Nortel

Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at For the latest Nortel news, visit

Certain information included in this press release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events.

Factors which could cause results or events to differ from current expectations include, among other things: the outcome of regulatory and criminal investigations and civil litigation actions related to Nortel's restatements and the impact any resulting legal judgments, settlements, penalties and expenses could have on Nortel's results of operations, financial condition and liquidity, and any related potential dilution of Nortel's common shares; the findings of Nortel's independent review and implementation of recommended remedial measures; the outcome of the independent review with respect to revenues for specific identified transactions, which review will have a particular emphasis on the underlying conduct that led to the initial recognition of these revenues; the restatement or revisions of Nortel's previously announced or filed financial results and resulting negative publicity; the existence of material weaknesses in Nortel's internal control over financial reporting and the conclusion of Nortel's management and independent auditor that Nortel's internal control over financial reporting is ineffective, which could continue to impact Nortel's ability to report its results of operations and financial condition accurately and in a timely manner; the impact of Nortel's and NNL's failure to timely file their financial statements and related periodic reports, including Nortel's inability to access its shelf registration statement filed with the United States Securities and Exchange Commission (SEC); ongoing SEC reviews, which may result in changes to Nortel's and NNL's public filings; the impact of management changes, including the termination for cause of Nortel's former CEO, CFO and Controller in April 2004; the sufficiency of Nortel's restructuring activities, including the work plan announced on August 19, 2004 as updated on September 30, 2004 and December 14, 2004, including the potential for higher actual costs to be incurred in connection with restructuring actions compared to the estimated costs of such actions;

cautious or reduced spending by Nortel's customers; increased consolidation among Nortel's customers and the loss of customers in certain markets; fluctuations in Nortel's operating results and general industry, economic and market conditions and growth rates; fluctuations in Nortel's cash flow, level of outstanding debt and current debt ratings; Nortel's monitoring of the capital markets for opportunities to improve its capital structure and financial flexibility; Nortel's ability to recruit and retain qualified employees; the use of cash collateral to support Nortel's normal course business activities; the dependence on Nortel's subsidiaries for funding; the impact of Nortel's defined benefit plans and deferred tax assets on results of operations and Nortel's cash flow; the adverse resolution of class actions, litigation in the ordinary course of business, intellectual property disputes and similar matters; Nortel's dependence on new product development and its ability to predict market demand for particular products; Nortel's ability to integrate the operations and technologies of acquired businesses in an effective manner; the impact of rapid technological and market change; the impact of price and product competition; barriers to international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of rationalization and consolidation in the telecommunications industry; changes in regulation of the Internet; the impact of the credit risks of Nortel's customers and the impact of customer financing and commitments; stock market volatility generally and as a result of acceleration of the settlement date of Nortel's forward purchase contracts; negative developments associated with Nortel's supply contracts and contract manufacturing agreements, including as a result of using a sole supplier for a key component of certain optical networks solutions; the impact of Nortel's supply and outsourcing contracts that contain delivery and installation provisions, which, if not met, could result in the payment of substantial penalties or liquidated damages; any undetected product defects, errors or failures; and the future success of Nortel's strategic alliances.

For additional information with respect to certain of these and other factors, see the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed by Nortel 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.

Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks. Microsoft is a trademark of Microsoft.

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