Table: Nortel's Outlook: Let's Do the Math

Nortel Networks has told investors that its revenues will rise by 15% in 2001,

but a sector-by-sector analysis by brokerage house ABN Amro

suggests that 10% is more likely.

PROSPECTS FOR 2001:

TRADITIONAL TELEPHONE EQUIPMENT Selling equipment to phone companies used to be Nortel's strength

But demand for traditional voice switches, the key product in this division, is fading fast.

CORPORATE AND METRO EQUIPMENT This unit, which sells communications gear to corporations and local phone companies,

has been a weak spot for Nortel. Cisco Systems commands 59% of the market for switches

sold to corporations, vs. Nortel's 8%.

The same slowdown that is hitting Cisco will hit causing a sharp drop in revenue growth.

WIRELESS EQUIPMENT Nortel has relentlessly chased the third-generation (3G) wireless market

and has landed some big contracts overseas with BT Cellnet,

Airtel, and others. But telecom players in the U.S. and Europe

will probably slow their spending this year in the face of a profit

crunch and weak consumer demand for 3G services.

OPTICAL EQUIPMENT AND COMPONENTS This has been the growth engine for Nortel. But troubled telecom companies are

slashing their spending, and no improvement is in sight.

2001 2000 EXPECTED EXPECTED REVENUE 2000 2001 SALES GROWTH (in billions) GROWTH (in billions) (decline)

TRADITIONAL $6.5 0.6% $5 (23%) TELEPHONE EQUIPMENT

CORPORATE 10.1 44.9 11.9 18 AND METRO EQUIPMENT

WIRELESS 5.1 31.3 5.9 16 EQUIPMENT

OPTICAL 10.6 138.8 13.1 23 EQUIPMENT & COMPONENTS

TOTAL $30.3* 42% $33.3* 10%

* After eliminating sales between business units of $2 billion in 2000

and $2.6 billion in 2001

Data: ABN Amro, company reports

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