Press Releases

Nortel Networks Acquires Dimension Enterprises, Inc. to Offer Service Providers Next-Generation Internet Data Centers and Consulting and Integration Services

February 9, 2000 - WASHINGTON D.C. - Nortel Networks* [NYSE/TSE: NT] announced the acquisition of Dimension Enterprises, Inc., a Herndon, Va.-based engineering and business strategy consulting firm for up to US$64.5 million in cash. Dimension Enterprises, Inc. (DEI) will help Nortel Networks design and engineer Internet Data Centers which house the eBusiness content that fuels the Internet economy and are a key component of the high-performance Internet. The acquisition strengthens Nortel Networks' Application Service Provider (ASP) end-to-end offering, called the Managed Applications Services Initiative, which was announced in December, 1999.

Nortel Networks also plans to leverage DEI's expertise to build new levels of quality, reliability and profitability into Internet Data Centers by enabling service providers to quickly bring to market revenue-generating and high-performance managed applications services.

DEI's customers include AT&T, BT, iPass, and Global One. The company's core competencies include expertise in business strategy consulting, Internet security, IP networking, operational support systems, enterprise application integration, and Internet data center design and implementation.

The acquisition supports Nortel Networks' business strategy to lead the market in delivering complete solutions for the emerging ASP market, and to provide the necessary technology and services to design and construct next-generation Internet Data Centers. Industry analyst group Dataquest says the emerging ASP market will grow to US$23 billion by 2003.

The acquisition also solidifies Nortel Networks' Global Professional Services leadership position as the next-generation partner for business transformation and implementation services.

"This acquisition represents a key focus for Nortel Networks' professional services strategy, also announced today, to acquire knowledge that will help our customers deploy and leverage high-performance Internet capabilities," said Kannankote Srikanth (Sri), president, Global Professional Services, Nortel Networks. "DEI further differentiates our ASP market offering by providing a critical service component to complement our end-to-end offer enabling service providers to deliver high performance and secure application services to their customers. DEI's focus on addressing customer's business strategy needs up front is a perfect fit with our Global Professional Services philosophy and will help us extend value to our customers."

"Nortel Networks is now positioned in the ASP market to serve as a prime technology and services solutions integrator, developing and implementing business and service plans, designing and building Internet Data Centers worldwide," said Richard Caruso, president, ASP Market Segment, Nortel Networks. "By selecting and implementing application solutions and providing systems integration, we'll bring together core networks, management systems and data centers into a single high-performance solution. Dimension employees will help us implement our recently announced EINSTEINet ASP initiative in Germany."

"BT has worked extensively with DEI in the past to help develop our web hosting offer," said Vernon Irvin, SVP marketing and Internet, BT Worldwide. "They will obviously complement Nortel Networks' foray into the IP space and make a fine addition to their portfolio of services."

"The Internet Data Center is the network's most critical hub in the delivery of services and applications over the Internet," said Mike Fitzgerald, DEI's president. "We have a laser focus on taking applications hosting and delivery centers to the next level of profitability and capability for all of our customers. Nortel Networks will now bring us the resources required to provide strong support to customers which have requirements for global market presence."

DEI, which engineered and operates one of the world's largest Internet Data Centers, will strengthen Nortel Networks' Global Professional Services and serve as a critical resource for Nortel Networks' ASP initiative. DEI's employees will remain at its existing facilities.

The acquisition is among the latest made by Nortel Networks, which recently announced its acquisition of Qtera Corp., Promatory Communications and other advanced networking companies with an eye towards building the next-generation Optical Internet.

Nortel Networks' Managed Applications Services Initiative leverages Nortel Networks' key assets -Preside service-enabling software, Internet telephony applications, industry-leading Optical Internet and Wireless Internet technologies, and its acquisitions of Shasta, XCEL and Periphonics to deliver the enabling infrastructure, Serviceware and the applications that are designed to accelerate the ASP market. DEI brings the element of consulting and systems integration to this broad portfolio.

DEI was founded in 1992, and is headquartered in Herndon, Va. The company also has facilities in Chicago, Dallas and Santa Clara, and will soon have a presence in London and Hong Kong. DEI has grown rapidly from its inception and is one of the most respected in its field. DEI's professionals include data center architects, network systems and applications engineers, security specialists, and strategic consultants.

Nortel Networks is a global leader in telephony, data, eBusiness and wireless solutions for the Internet. The Company had 1999 US GAAP revenues of US$21.3 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.

*Nortel Networks, the Nortel Networks Globemark, Unified Networks, and How the world shares ideas are trademarks of Nortel Networks.