Milberg Weiss Expands Class Period for Class Action Suit against Nortel Networks Corporation

Business Wire, April 29, 2004

Business Editors/Financial Analysts

SAN DIEGO--(BUSINESS WIRE)--April 29, 2004

Milberg Weiss (http://www.milberg.com/cases/nortelnetworks/) today announced that an amended complaint has been filed on behalf of an institutional investor in the United States District Court for the Southern District of New York on behalf of purchasers of Nortel Networks Corp. ("Nortel") (NYSE:NT) publicly traded securities during the period between December 23, 2003 and April 27, 2004 (the "Class Period").

If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from March 17, 2004. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, William Lerach or Darren Robbins of Milberg Weiss at 800/449-4900 or via e-mail at wsl@milberg.com. If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.milberg.com/cases/nortelnetworks/. Any member of the purported class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.

The amended complaint charges Nortel and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Nortel supplies products and services that support the Internet and other public and private data, voice and multimedia communications networks using wireline and wireless technologies.

The amended complaint alleges that during the Class Period, defendants caused Nortel's shares to trade at artificially inflated levels through the issuance of false and misleading financial statements. Defendants had formulated a plan to have the Company's credit rating on its $4.1 billion debt raised from "B3" to "investment grade." Defendants were advised by Moody's that if the Company could improve its financials, the Company's rating would be raised. Not only would this rating change have a positive impact on the Company's stock price but this would in turn further inflate the Company's net income (beyond the already falsified accounting). By raising the Company rating, the Company could refinance its debt at a preferable rate, and increase the Company's margins. Defendants had hoped that the Company's positive (albeit false) Q4 2003 report would put pressure on Moody's to raise its rating. Regardless, by posting the false (but positive) Q4 results, defendants and the Company's top executives were rewarded with $30 million in bonuses. Then as defendants' scheme began to unwind, Nortel put its chief financial officer and controller on leave of absence pending completion of an investigation into the circumstances leading to the restatement.

On March 15, 2004, Nortel delayed filing its annual report and admitted it may have to restate results for a second time in six months while the timing of certain accruals and provisions in 2003 and earlier periods were re-examined. In response to this delay in filing, the price of the Company's shares fell. Defendants knew that as a result of their actions, Nortel's lenders could demand early repayment of $3.6 billion of notes and convertibles bonds. As this leaked out into the market the Company's shares continued to decline.

Then on April 28, 2004, the Company fired its CEO, CFO and Controller and disclosed that its previously announced restatement would be worse than earlier planned. In addition, the Company disclosed that its financial results for Q1 2004 would be indefinitely delayed. On this news, Nortel shares plunged to below $4.00 per share. The amended complaint also demands the executives return their ill-gotten bonuses for 2003.

Plaintiff seeks to recover damages on behalf of all purchasers of Nortel publicly traded securities during the Class Period (the "Class"). The plaintiff is represented by Milberg Weiss Bershad Hynes & Lerach LLP, who has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.

Milberg Weiss Bershad Hynes & Lerach LLP, a 190-lawyer firm with offices in New York, San Diego, San Francisco, Los Angeles, Boca Raton, Seattle and Philadelphia, is active in major litigations pending in federal and state courts throughout the United States. Milberg Weiss has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of World War II and other human rights violations, and has been responsible for more than $30 billion in aggregate recoveries. The Milberg Weiss website (http://www.milberg.com) has more information about the firm.