Nortel buys online voice technology firm DiamondWare

TORONTO (Reuters) - Nortel Networks Corp NT.TO NT.N is buying a company that provides voice communications for online game platforms and virtual worlds, with view to applying the technology to corporate communication products.

North America's biggest maker of telephone equipment said on Thursday it would pay about $7 million in cash for Arizona-based DiamondWare, whose technology has already been used in U.S. military communications.

Nortel said it could pay up to an additional $3 million to DiamondWare's shareholders based on the company achieving business milestones over the next 40 months.

The acquisition is appealing to Nortel because DiamondWare's technology can be used in virtual business meetings. Nortel has been targeting large corporations with its offering of "unified" communications.

Unified messaging ties together the capabilities of desktop computers, mobile phones and wired phones so that, for example, a voicemail on a standard telephone also arrives as an e-mail on a user's smartphone.

Essentially, it makes employees and executives easier to reach and allows them to communicate in new ways.

In a separate announcement, Toronto-based Nortel also said it was developing software that would let companies hold virtual meetings online.

Nortel's shares were 4 Canadian cents lower at C$6.29 on the Toronto Stock Exchange.

($1=$1.05 Canadian)

(Reporting by Wojtek Dabrowski; editing by Ted Kerr)