Nortel also said it will continue to cooperate fully with U.S. and Canadian securities and law enforcement authorities regarding ongoing investigations into the company's accounting restatements. The proposed settlement is not related to these investigations, Nortel said.

The settlement proposal "goes to putting things behind them," said Zeus Kerravala, an analyst at Yankee Research Group Inc. in Boston. "There's no correlation between payment and any wrongdoing, so it's more just trying to close the door on an ugly period in Nortel's history. They'll pay the lawsuits, get it behind them and move on."

He said that "for the most part," Nortel's financial problems haven't mattered that much to the company's customers. But the financial restatements "do leave the door open for competitors such as Cisco and Avaya to raise questions about the stability of Nortel," Kerravala added. "This means that even though a network manager may want to buy Nortel, the chief financial officer and the chief information officer may have concerns."