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To: Harold S. who wrote (50396)	1/7/2004 6:59:41 PM
From: E.J. Neitz Jr	of 53068

Goldman Sachs comments this evening on Nortel (NT-NY) Nortel Networks Corporation EPS (FY Dec) 2003E $0.05, 2004E $0.10 Outperform/Neutral (NT) $4.76 Nortel won a multi-year agreement with Verizon to supply "voice over IP" (VOIP) technology. This is a very significant win for both Nortel and the industry. For the industry, it is a clear indication that carriers will shift capex towards new technology and away from old technology faster than investors currently expect. This is positive for Nortel, Juniper, Sonus, and Cisco - the key suppliers of new technology. For Nortel, the contract supports our market share and margin expansion thesis that underpinned our July 2003 upgrade of Nortel shares. Nortel will gain share as major customers shift spending towards new technologies such as VOIP. Additionally, VOIP typically has 50-60% gross margins vs. the industry's typical 40-45% level. We reiterate our Outperform rating on NT shares.

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