Class Action Lawsuit Commenced Against Nortel Networks Corp. by Bernstein Liebhard & Lifshitz, LLP

A securities class action lawsuit was commenced in the United States District Court for the Southern District of New York on behalf of all persons who purchased or acquired securities of Nortel Networks Corp. (NYSE: NT) ("Nortel" or the "Company") between December 23, 2003 through March 12, 2004, inclusive (the "Class Period"), seeking to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act"). A copy of the Complaint is available from the Court or from Bernstein Liebhard & Lifshitz, LLP. Please visit our website at http://www.bernlieb.com or contact us at (800) 217-1522 or by e-mail at NT@bernlieb.com.

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 schemed to have the Company's credit rating raised from "B3" to "investment grade" on its $4.1 billion debt. Defendants had been advised by Moody's credit officer that if Nortel could improve its financials, it would raise the Company's rating. This change of rating would not only have a positive impact on the Company's stock price, but it would, in turn, also further inflate the Company's net income beyond the already falsified accounting. By raising the Company's rating, the Company could refinance its debt at a preferable rate, and increase the Company's margins. Defendants' plan was that the Company's positive -- though false -- fourth quarter 2003 report would cause Moody's to raise its rating. Moreover, by posting the positive -- though false -- fourth quarter results and filing the 10-K, Defendants and the Company's top executives received $30 million in bonuses.

On March 15, 2004, Nortel announced that it was again delaying filing an annual report, and also admitted it may have to restate results for the second time in six months while the timing of certain accruals and provisions in 2003 and earlier periods were re-examined. Nortel also announced that it had placed Chief Financial Officer Douglas Beatty and controller Michael Gollogly on leave of absence, pending investigation into the circumstances leading to the restatement.

In response to the Company's delay in filing on March 15, 2004, Nortel's shares dropped. Moreover, Defendants knew that as a result of their actions, the Company's lenders could demand early repayment of $3.6 billion of notes and convertibles bonds. As this news leaked out to the market, the Company's shares continued their decline.

Plaintiff seeks to recover damages on behalf of all those who purchased or otherwise acquired Nortel securities during the Class Period. If you purchased or otherwise acquired Nortel securities during the Class Period, and either lost money on the transaction or still hold the securities, you may wish to join in the action to serve as lead plaintiff. In order to do so, you must meet certain requirements set forth in the applicable law and file appropriate papers no later than May 17, 2004.

A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Bernstein Liebhard & Lifshitz, LLP, or other counsel of your choice, to serve as your counsel in this action.

Bernstein Liebhard & Lifshitz, LLP has been retained as one of the law firms to represent the class. The attorneys at Bernstein Liebhard & Lifshitz, LLP have extensive experience in securities class action cases, and have played lead roles in major cases resulting in the recovery of hundreds of millions of dollars to investors. For more information about Bernstein Liebhard & Lifshitz, LLP, please visit our website at http://www.bernlieb.com.

If you would like to discuss this action or if you have any questions concerning this Notice or your rights as a potential class member or lead plaintiff, you may contact our Shareholder Relations Department, at Bernstein Liebhard & Lifshitz, LLP, 10 East 40th Street, New York, New York 10016, (800) 217-1522 or (212) 779-1414 or by e-mail at NT@bernlieb.com.

Contact: Shareholder Relations Department Bernstein Liebhard & Lifshitz, LLP 10 East 40th Street New York, New York 10016 (800) 217-1522 (212) 779-1414 e-mail: NT@bernlieb.com