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Nortel Networks Invests US$ 400 million to Triple Global Production Capacity for High Performance Optical
Internet Systems -- Responds to Explosive Customer Demand
Creates Over 5000 Jobs in Canada, United Kingdom and United States
OTTAWA, ON, Nov. 2 /CNW/ - Nortel Networks (NYSE/TSE: NT) will invest an
additional US$ 400 million in its booming optical networking and components
business. The investment will create about 5,000 jobs in the company's optical
business and triple production capacity in 2000. This is in addition to the
doubling of production capacity already this year.
This strategic investment will expand and accelerate the development and
deployment of the company's market-leading Optical Internet systems. The
investment includes establishing a new facility in Ottawa for the fabrication
of precision lasers and performance-defining optical components. Such
components are critical to the creation of Nortel Networks recently announced
next-generation dense wavelength division multiplexing (DWDM) 6.4 terabit
systems. These world-leading systems require precise production, to exacting
tolerances, of hundreds of specific wavelengths (colors) of lasers -- an area
of expertise that has enabled the company to establish Optical Internet
leadership.
The company plans to build new facilities in Ottawa and occupy a new
facility in Montreal, Canada; expand existing campuses in Paignton, United
Kingdom, and Monkstown, Northern Ireland; and increase its supply chain and
customer service capabilities in Atlanta, Georgia, and Raleigh, North Carolina
in the United States.
''We're moving at web speed to meet growing customer demand for our
market-leading Optical Internet capabilities,'' said John Roth, President and
Chief Executive Officer, Nortel Networks. ''The expansion of our global
optical production capacity will provide the scale needed to ensure we
maintain our first mover advantage and extend our leadership in optical
networking and the high performance Internet well into the new millennium.
This isn't just about meeting customer demand, it is also about enhancing a
source of long-term competitive advantage.''
State-of-the-art optical networking and component technology has enabled
Nortel Networks to become the global market leader in optical networking and a
leading supplier of optical components as the overall market grows at more
than 50% annually to over US$ 35 billion by 2001.(1) Revenue from the
company's optical business is growing rapidly as service providers race to
meet explosive demands for bandwidth driven by the Internet and growth in
eBusiness.
The investment plan reflects Nortel Networks' global operations strategy
announced earlier this year. As part of this strategy, the company is
directing its internal resources to those specialized areas that offer unique
advantages in the market place, and outsourcing to global suppliers those
capabilities readily available to increase agility and flexibility.
''Leadership in DWDM technology will be essential for long-term
competitive advantage in this rapidly growing market, as service providers
deploy hundreds of wavelengths per fiber, and as the need for per-wavelength
management becomes even more important with multi-terabit systems,'' said
Roth. ''Our expertise in delivering end-to-end Optical Internet solutions and
professional services such as business planning, installation and systems
integration gives us a strategic, competitive edge.''
Investment Plan
---------------
The plan includes:
- Global Investments: Nortel Networks expects to invest US$ 143 million
in the Ottawa region, US$ 82 million in the Montreal area, and US$ 105
million divided between Paignton and Monkstown, with the remaining
US$ 70 million primarily in the United States.
- OPTera Optical Networking and Components Portfolio: Investments cover
production capabilities for optical systems and such components as
DWDM lasers, high-bandwidth receivers, and high-speed electronic
circuits. These highly sophisticated optical components are integral
to the company's optical capabilities and complement those already
provided by key suppliers. Major investments in this area will be in
Ottawa (with the construction of a new 125,000 sq. foot facility), and
in Paignton, through expansion of the existing campus.
- Systems Integration: To meet customer demand for Nortel Networks
optical networking products, the investment announced today will
triple the company's current capacity to deliver these systems. The
company will be expanding its operations at its St. Laurent (Montreal)
and Monkstown (Northern Ireland) Systems Houses.
- Professional Services. Nortel Networks will also be adding resources
globally to support customer demand for design, supply and expansion
of complex DWDM networks on a turnkey basis.
- High-Tech Optical Talent. About 5000 full-time positions in systems
integration and testing, engineering, supply chain management, and
customer service will be created. Of those, 850 will be in Ottawa,
1450 in Montreal, 1800 divided between Paignton and Monkstown, and the
remaining 900 in other locations including the United States.
Nortel Networks is building 32 out of 40 national and pan-European
optical networks announced over the past two years globally. These networks
are the foundation for the high performance Internet that will deliver
increased speed, reliability, quality and new economics.
Nortel Networks is a global leader in telephony, data, wireless and
wireline solutions for the Internet. The Company had 1998 revenues of US$ 17.6
billion and serves carrier, service provider and enterprise customers
globally. Today, Nortel Networks is creating a high-performance Internet that
is more reliable and faster than ever before. It is redefining the economics
and quality of networking and the Internet through Unified Networks that
promise a new era of collaboration, communications and commerce. Visit us 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 impact of price and product
competition; the dependence on new product development; the impact of rapid
technological and market change; the ability of Nortel Networks to integrate
the operations and technologies of acquired businesses in an effective manner;
general industry and market conditions and growth rates; international growth
and global economic conditions, particularly in emerging markets and including
interest rate and currency exchange rate fluctuations; unanticipated impact of
Year 2000 issues; and the impact of consolidations in the telecommunications
industry. For additional information with respect to certain of these and
other factors, see the reports filed by Nortel Networks with the United States
Securities and Exchange Commission. Nortel Networks disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
--------------------
(1) SG Cowen with estimates from Nortel Networks
-30-
For further information: Media Relations: Jeff Ferry, Nortel Networks,
(703) 712-8339, jferry@nortelnetworks.com; Investor Relations: Angela
McMonagle, Nortel Networks, (905) 863-6044, mcmona@nortelnetworks.com;
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