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LG Electronics, Nortel Launch Joint Venture for Telecom, Networking Solutions

  • 03 November, 2005 11:39

<p>New Entity to Leverage Best-in-Class Resources, Expertise While Harnessing Technology Leadership in Major Markets</p>
<p>SEOUL, South Korea – LG Electronics [KSE: 06657.KS] and Nortel* [NYSE/TSX: NT] today closed the transaction announced in August that forms a joint venture between the two companies. The joint venture, named LG-Nortel Co. Ltd., will offer leading-edge communications and networking solutions in the wireline, optical, wireless and enterprise markets in South Korea and the rest of the world.</p>
<p>Nortel and LGE have already successfully collaborated to win significant contracts in South Korea since the announcement in January of a Memorandum of Understanding concerning the joint venture. Within the last three months, LG and Nortel have been selected to deploy HSDPA/WCDMA networks for KTF and SKT, paving the way for the joint venture to become a major 3G supplier in one of the most advanced telecommunications markets in the world.</p>
<p>“Today marks the birth of a new breed of telecommunications company,” said S.S. Kim, chief executive officer and vice-chairman, LG Electronics. “By combining the technological know-how and market understanding of two major players in the industry, we are confident we will be able to expedite the introduction of next generation solutions for the benefit of service providers and end users.”</p>
<p>“Korea is known for its market-leading adoption of cutting-edge technology,” said Bill Owens, vice-chairman and chief executive officer, Nortel. “The early success of the LG-Nortel collaboration is a testament to the vision of bringing the two teams together to form a joint venture and playing to win in South Korea and other major markets.”</p>
<p>LG-Nortel’s headquarters will be in South Korea, with sales and marketing located in Kangnam, Seoul; R&amp;D facilities in Anyang in the province of Gyeonggi; and an employee population of approximately 1,400. LG-Nortel also announced the appointment of J.R. Lee from LGE as chief executive officer, Paul House from Nortel as chief operating officer, Peter Dans from Nortel as chief financial officer, and C.H. Hwang from LGE as chief technology officer.</p>
<p>About LG Electronics
LG Electronics is a global leader in providing cutting-edge convergent electronics, information and communications products designed to meet the diverse needs of fast-changing consumers. With consolidated sales of US$37.7 billion and overseas sales of US$32.6 billion (86 percent of total sales), LG Electronics employs more than 70,000 employees in 76 subsidiaries located in 39 countries and operates four business units including Mobile Communications, Digital Appliance, Digital Display and Digital Media. LG Electronics Mobile Communications Company is the world's leading manufacturer of WCDMA (UMTS), CDMA and GSM handsets, and the fastest growing manufacturer of mobile phones worldwide. The company provides a total range of wired and wireless solutions, and is rapidly establishing a global presence as it cultivates international market share in 3G handsets. For more information please visit www.lge.com.</p>
<p>About Nortel
Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world’s most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world’s greatest challenges. Nortel does business in more than 150
countries. For more information, visit Nortel on the Web at www.nortel.com. For the latest Nortel news, visit
www.nortel.com/news.</p>
<p>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 outcome of regulatory and criminal investigations and civil litigation actions related to Nortel’s restatements and the impact any resulting legal judgments, settlements, penalties and expenses could have on Nortel’s results of operations, financial condition and liquidity, and any related potential dilution of Nortel’s common shares; the findings of Nortel’s independent review and implementation of recommended remedial measures; the outcome of the ongoing independent review with respect to revenues for specific identified transactions, which review will have a particular emphasis on the underlying conduct that led to the initial recognition of these revenues; the restatement or revisions of Nortel’s previously announced or filed financial results and resulting negative publicity; the existence of material weaknesses in Nortel’s internal control over financial reporting and the conclusion of Nortel’s management and independent auditor that Nortel’s internal control over financial reporting is ineffective, which could continue to impact Nortel’s ability to report its results of operations and financial condition accurately and in a timely manner; the impact of Nortel’s and NNL’s failure to timely file their financial statements and related periodic reports, including Nortel’s inability to access its shelf registration statement filed with the United States Securities and Exchange Commission (SEC); the impact of management changes, including the termination for cause of Nortel’s former CEO, CFO and Controller in April 2004; the sufficiency of Nortel’s restructuring activities, including the work plan announced on August 19, 2004 as updated on September 30, 2004 and December 14, 2004, including the potential for higher actual costs to be incurred in connection with restructuring actions compared to the estimated costs of such actions; cautious or reduced spending by Nortel’s customers; increased consolidation among Nortel’s customers and the loss of customers in certain markets; fluctuations in Nortel’s operating results and general industry, economic and market conditions and growth rates; fluctuations in Nortel’s cash flow, level of outstanding debt and current debt ratings; Nortel’s monitoring of the capital markets for opportunities to improve its capital structure and financial flexibility; Nortel’s ability to recruit and retain qualified employees; the use of cash collateral to support Nortel’s normal course business activities; the dependence on Nortel’s subsidiaries for funding; the impact of Nortel’s defined benefit plans and deferred tax assets on results of operations and Nortel’s cash flow; the adverse resolution of class actions, litigation in the ordinary course of business, intellectual property disputes and similar matters; Nortel’s dependence on new product development and its ability to predict market demand for particular products; Nortel’s ability to integrate the operations and technologies of acquired businesses in an effective manner; the impact of rapid technological and market change; the impact of price and product competition; barriers to international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of rationalization and consolidation in the telecommunications industry; changes in regulation of the Internet; the impact of the credit risks of Nortel’s customers and the impact of customer financing and commitments; general stock market volatility; negative developments associated with Nortel’s supply contracts and contract manufacturing agreements, including as a result of using a sole supplier for a key component of certain optical networks solutions; the impact of Nortel’s supply and outsourcing contracts that contain delivery and installation provisions, which, if not met, could result in the payment of substantial penalties or liquidated damages; any undetected product defects, errors or failures; the future success of Nortel’s strategic alliances; and certain restrictions on how Nortel and its president and chief executive officer conduct business. For additional information with respect to certain of these and other factors, see the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed by Nortel with the SEC. Unless otherwise required by applicable securities laws, Nortel disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.</p>
<p>-end-</p>
<p>*Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks.</p>
<p>For further information:</p>
<p>Elizabeth Lovett
Nortel
(02) 8870 5625
elovett@nortel.com</p>
<p>Guy Lerner
Watterson Marketing Communications
(02) 9437 6122
guy.lerner@watterson.com.au</p>

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