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( BW)(TX-NORTEL)(NT)(NT.TO) Nortel Networks to Sell Clarify Assets to Amdocs Limited for US$200 Million in Cash; Sale Highlights Continued Progress Against Work Plan

Business Editors & High Tech Writers

TORONTO--(BUSINESS WIRE)--Oct. 2, 2001--Nortel Networks (NYSE:NT) (TSE:NT.) today announced an agreement whereby it will sell substantially all of its Clarify assets to Amdocs Limited (NYSEOX) for approximately US$200 million in cash. As a condition of the sale in Europe, all necessary employee consultation requirements must also be met. The Clarify portfolio of Customer Relationship Management (CRM) solutions are used by businesses globally to enable personalized interactions with customers and build relationships of loyalty with their customers.
"We are making excellent progress against the work plan we laid out earlier this year and this sale of non-core assets is further evidence of that," said Frank Plastina, president service provider and corporate networks, Nortel Networks. "We continue to execute with speed and agility the streamlining of our business around our core markets to align our cost structure, and to strengthen our financial position."
Under terms of the agreement, Nortel Networks will sell substantially all assets used in the Clarify portfolio, including patents, intellectual property and trademarks, to Amdocs Limited. Existing customer contracts will be assumed by Amdocs Limited, as well as certain leased office space. The transaction is expected to close in the fourth quarter of 2001. The boards of directors of both companies have approved the transaction. The completion of the transaction is subject to customary regulatory approvals.
Amdocs Limited is a leading provider of information solutions to the communications and IP industry worldwide, offering CRM, billing and order management systems for communications providers, and business support systems for directory publishing companies. Amdocs Limited delivers end-to-end software solutions and offers world-class outsourcing capabilities, supporting convergent multi-service operations, emerging markets and next generation services across all lines of business - wireline, wireless, broadband, electronic and mobile commerce and IP services. Amdocs Limited offers full voice and IP capabilities with a comprehensive single customer view and convergent product catalog.
Nortel Networks is a global leader in networking and communications solutions and infrastructure for service providers and corporations. The Company is at the forefront of transforming how the world communicates, exchanges information and profits from the high-performance Internet through capabilities spanning the Optical Internet, Wireless Internet, Intelligent Internet and IP (Internet Protocol) technologies and services. Nortel Networks does business in more than 150 countries and can be found on the Web at www.nortelnetworks.com.

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 severity and duration of the industry adjustment; the sufficiency of our restructuring activities, including the potential for higher actual costs to be incurred in connection with restructuring actions compared to the estimated costs of such actions; fluctuations in operating results and general industry, economic and market conditions and growth rates; the ability to recruit and retain qualified employees including at the most senior management levels; fluctuations in cash flow, the level of outstanding debt and debt ratings; the ability to make acquisitions and/or 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; international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of rationalization in the telecommunications industry; the dependence on new product development; the uncertainties of the Internet; the impact of the credit risks of our customers and the impact of increased provision of customer financing and commitments; stock market volatility; the entrance into an increased number of supply, turnkey, and outsourcing contracts which contain delivery, installation, and performance provisions, which, if not met, could result in the payment of substantial penalties or liquidated damages; the ability to obtain timely, adequate and reasonably priced component parts from suppliers and internal manufacturing capacity; the future success of our strategic alliances; and the adverse resolution of litigation. For additional information with respect to certain of these and other factors, see the reports filed by Nortel Networks Corporation and Nortel Networks Limited with the United States Securities and Exchange Commission. Unless otherwise required by applicable securities laws, Nortel Networks Corporation and Nortel Networks Limited disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Nortel Networks, the Nortel Networks logo and the Globemark are trademarks of Nortel Networks.


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KEYWORD: bwcht TEXAS INTERNATIONAL CANADA TRACK
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS INTERNET TELECOMMUNICATIONS
SOURCE: Nortel Networks

[icemen]

Nortel Lowers Break-Even Point, Slashes Jobs
By Ian Karleff

TORONTO (Reuters) - Nortel Networks Corp. (NYSE:NT - news) said on Tuesday it would slash its payroll by a further 30 percent and post a $3.6 billion third-quarter loss as the telecoms equipment maker trims operations to break even in future quarters.

Nortel also said Chief Financial Officer Frank Dunn would replace John Roth as chief executive, effective Nov. 1. Roth will serve as vice-chairman through to the end of 2002, while Terry Hungle, former president of finance, will become chief financial officer.

The struggling firm, once one of the world`s most valuable, said it would lay off 10,000 more workers on top of 10,000 set to leave the payroll because they work for divisions being sold, Nortel said. It said on Tuesday it inked deals to sell its Clarify unit to Amdocs Ltd. (NYSEOX - news) and its French distribution division to SPIE.

With the 30,000 jobs that have already been slashed, staff will number 45,000, less than half the peak work force.

While carrier spending will not return to the levels of 2000, the ``industry is now starting to reach sustainable levels of spending,`` Roth said.

Telecom carriers that were close to going bankrupt have now succumbed to their financial woes, and the drop in wholesale telecom traffic has now subsided, he told a conference call.

``Visibility remains poor but we are starting to see some clarity develop,`` Roth said.

WARNING NOT A COMPLETE SURPRISE

Analysts said the warning was not completely unexpected as companies, still reeling from the effects of the Sept. 11 attacks on the United States, did not go to extraordinary lengths to pack sales into the September quarter.

``People had expected everyone to miss the quarter so it`s not surprising that they missed,`` said Christin Armacost at SG Cowan. ``Market conditions are especially challenging for some of these companies, and they are now getting down to a point where they can drive a profitable business model.``

Nortel said it could not point to any specific consequences from the aftermath of the attacks, but did say customers were showing interest in security products like those that protect computer systems from viruses.

Nortel said in a statement after the close of markets on Tuesday it expects third-quarter revenue from continuing operations of about $3.5 billion, and a loss, excluding charges, of about $910 million, or 28 cents a share.

It will also record incremental charges of $1.3 billion, restructuring charges of $735 million, and charges for amortization of assets of $650 million, for an after-tax net loss of $3.6 billion, or $1.13 a share.

This follows on a stunning $19.2 billion second-quarter loss. Nortel also wrote down almost $14 billion in goodwill to adjust for the reduced value of a string of acquisitions.

By the first quarter of 2002, it will have a cost structure allowing it to break even at a quarterly revenue level below $4 billion, instead of the previous $5 billion, it said.

``The business model will make very good money at $4 billion...$4 billion of revenue per quarter is a reasonable revenue expectation for Nortel,`` said incoming chief Dunn.

The company stressed it is in good financial shape with cash and lines of credit of about $7 billion.

Including Wednesday`s sale of Clarify for about $200 million, Nortel expects to generate $700 million from the proceeds of divestitures, some yet to be announced.

Armacost said she had been expecting revenues of $4.6 billion for the third quarter, while analysts polled by Thomson Financial/First Call had expected $3.9 billion on average, and an operating loss of 21 cents a share.

Shares of Nortel closed down 18 cents at $5.29 in New York on Tuesday, near a year low of $4.76, and in Toronto the shares closed down 25 Canadian cents at C$8.33.