SAN FRANCISCO (AP) _ Nortel Networks, North America's No. 2 maker of telecommunications products, said Monday it is buying software maker Clarify Inc. in an all-stock deal valued at $2.1 billion.

Ontario-based Nortel had sales of $17.6 billion last year, trailing only Lucent Technologies in the manufacture of switching hardware, wireless, and broadband network systems for service providers and telephone systems.

Clarify makes software that automates interactions with customers, from help desks to sales and customer service. The company, whose biggest competitor was Seibel Systems, has nearly 800 employees. It had $130.5 million in sales last year.

Clarify will be a wholly owned Nortel subsidiary based in San Jose.

Managing customer relationships is seen as the next big step in the development of e-businesses, said F. William Conner, president of Nortel's Enterprise Solutions unit.

``Together we will provide a new customer experience by unifying the high performance Internet with front office solutions and customer interactions of all kinds,'' he said. ``This will deliver greater returns on customer relationships for enterprises and service providers worldwide.''

The transaction approved by the boards of directors of both companies gives Clarify shareholders 1.3 shares of Nortel stock for each share of Clarify they own. That represents a 50 percent premium for Clarify shareholders, based on Monday's closing prices.

Nortel shares closed down 31 1/4 cents at $52.37 1/2 on the New York Stock Exchange. Clarify stock rose $1.96 7/8 to close at $45.31 1/4 on the Nasdaq Stock Market.