Part of the strategic initiative for metro Ethernet networks for carriers and IPTV includes the appointment of Philippe Morin as president of the new unit, Nortel said. The unit will also focus on wireless capabilities, according to a Nortel statement.

Zafirovski said Nortel has been on a "stabilizing" path in the past six months since his arrival as CEO. For fiscal 2005, Nortel's revenue was $10.5 billion, an increase of $1 billion over the prior year, but the company reported a loss of $2.6 billion, including $2.5 billion for the expense of handling shareholder lawsuits.

Nortel also said that its first-quarter revenue will be flat or down slightly compared with the first quarter of fiscal 2005, but with "strong revenue momentum for the rest of 2006, resulting in high single-digit growth for the full year 2006."