LG Electronics (KSE:06657.KS) and Nortel(1) (NYSE: NT)(TSX: NT) today announced the signing of a Memorandum of Understanding (MoU) to establish a joint venture for providing high quality, leading edge telecommunications equipment and networking solutions to Korea and other markets globally.
The announcement of the proposed 50-50(2) joint venture framework was made in Seoul by S.S. Kim, CEO and Vice-Chairman of LG Electronics and Bill Owens, president and chief executive officer of Nortel.
This impending cooperation supports the strategies of both companies for ongoing development of leading-edge telecommunications equipment and networking solutions to ignite and power global commerce. The proposed joint venture also reflects the companies' commitment to leverage best-in-class resources and expertise by joining forces with leading telecommunications players in key markets.
"To be a global communications provider, it is imperative for us to expand our market share and compete in Asia," Owens said. "Establishing a relationship with a world-class company is an important step. Korea is known for advanced and trailblazing technology in communications as it leads the rest of the world in embracing technology that enhances the human experience."
"Nortel is a true powerhouse in the world's telecommunications equipment market with strong technology and global competitiveness," said S.S. Kim. "LG Electronics is a top-notch telecommunication equipment and solutions provider, attested by its being the first in the world to provide a WCDMA system with video telephony in late 2002. Our joint-venture with Nortel is expected to create greater synergy between LG Electronics' cutting-edge technology and Nortel's expertise in delivering communications capabilities. We are confident that it will become one of the top-ranking players in the global telecommunications equipment market."
"Our intent is to invest in Korea to leverage the wealth of strong R&D talent and technology steeped in LG Electronics and Nortel to develop products and solutions for the global market," said John Giamatteo, president, Asia Pacific, Nortel. "We also intend for the proposed joint venture to market the entire Nortel portfolio of optical, wireless, wireline and enterprise products in Korea and, based on mutual discussion, in other markets as well."
"Telecommunications equipment is very closely related to mobile phones in development," said Mun Hwa Park, President, Mobile Communications Company, LG Electronics. "In developing hi-tech mobile phones, LG Electronics will collaborate with Nortel to be better positioned in setting standards for next-generation devices and developing technologies. Based on this, LG Electronics is expected to reduce the developing time for next-generation terminals and maintain its leading technology in global mobile phone market."
The proposed joint venture is subject to execution of a definitive agreement. The two companies expect to complete this transaction in the second quarter of 2005. (2) In the proposed joint venture, Nortel has 50 percent plus one share.
About LG Electronics
LG Electronics (Korea Stock Exchange:06657.KS), headquartered in Seoul, South Korea, was established in 1958 and has grown into a global force in electronics, information and communications products with annual total revenues of US$ 29.9 billion (consolidated). With more than 64,000 employees working in 73 overseas subsidiaries and marketing units around the world, LG Electronics is comprised of four main business companies including Digital Display, Digital Media, Digital Appliance, and Mobile Communications.
LG Electronics' goal worldwide is to create and enable the intelligent networking of digital products that will make consumers' lives better than ever. For more information, please visit www.lge.com.
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.
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; the findings of Nortel's independent review and implementation of recommended remedial measures; the outcome of the 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 controls over financial reporting; the impact of Nortel's and NNL's failure to timely file their financial statements and related periodic reports, including breach of its support facility and public debt obligations and Nortel's inability to access its shelf registration statement filed with the United States Securities and Exchange Commission (SEC); ongoing SEC reviews, which may result in changes to our public filings; the potential delisting or suspension of Nortel's and NNL's publicly traded securities; the impact of management changes, including the termination for cause of Nortel's former CEO, CFO and Controller in August 2004; the sufficiency of Nortel's restructuring activities, including the work plan announced on August 19, 2004 as updated on September 30, 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; 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 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 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; stock market volatility generally and as a result of acceleration of the settlement date or early settlement, which is currently not available, of Nortel's forward purchase contracts; 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; and the future success of Nortel's strategic alliances.
For additional information with respect to certain of these and other factors, see the most recent Annual Report on Form 10-K 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. (1) Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks.