Nortel Networks To Acquire Sonoma Systems

[Toronto, CANADA] Nortel Networks Corp. has agreed to acquire Sonoma
, which delivers high-speed integrated video, data and voice communications, simultaneously over a single connection.

The deal could be valued up to US $540 million in Nortel Networks common shares, a portion of which is contingent upon Sonoma Systems achieving certain
business objectives.

This acquisition will enable Nortel Networks to tie the bandwidth and power of the optical Internet to the access solutions of the local Internet. Service
providers will be able to deliver high-speed managed services to their business customers.

The Yankee Group estimates that the market for delivering these carrier-managed services will reach more than US $18 billion globally by 2002, up from
US $10 billion this year.

Sonoma Systems integrated access devices which are installed at customer premises, allow service providers to extend new services to business customers,
including high-speed local Internet access, video services and Internet telephony.

The acquisition will enable Nortel Networks customers to offer managed services via a network architecture that brings broadband content and
high-bandwidth capabilities to the edge of the network.

The Sonoma Systems products have been incorporated into Nortel Networks Universal Edge 600 Series of products.

The transaction, which is expected to close in the fourth quarter of 2000, is subject to customary regulatory and Sonoma Systems shareholder approvals.

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