Nortel in talks on potential takeovers - CEO

(Adds details, quotes)

By Wojtek Dabrowski

TORONTO, Aug 2 (Reuters) - Nortel Networks Corp. (NT.TO) NT.N has begun talks with potential takeover targets as North America's biggest maker of telephone equipment looks to expand its reach, its chief executive said on Thursday.

"We are doing lots of analysis internally on how to grow the company organically and we started discussions recently with companies that we believe can be adding to our growth trajectory," Mike Zafirovski told Reuters in an interview.

"We're confident that we'll be able to successfully integrate other activities if the pricing is appropriate," he said.

He provided few details on the size or scope of any acquisitions that the Toronto-based company might be pursuing.

Zafirovski has said he is comfortable growing Nortel by acquisitions. However, Nortel has been preoccupied in recent months with a turnaround effort.

At the same time, competitors have consolidated, prompting some analysts to speculate that Nortel may have to do the same to compete effectively.

In May, reports emerged that Nortel had been in talks to take over U.S. communications equipment maker Avaya Inc. (AV.N), but no deal has materialized.

Nortel shares were down C$1.83, or 8 percent, at C$21.09 on the Toronto Stock Exchange shortly after Zafirovski's comments. In New York, they fell $1.70 to $20.04.

Also on Thursday, Nortel reported it swung to a second-quarter loss as lower than expected sales and restructuring charges and other one-time charges dragged on its results.

($1=$1.05 Canadian)

((Reporting by Wojtek Dabrowski, editing by Peter Galloway; E-mail: wojtek.dabrowski@reuters.com; Reuters Messaging: wojtek.dabrowski.reuters.com@reuters.net. Telephone: +1-416-941-8009)) Keywords: NORTEL ACQUISITIONS/

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