Nortel’s Q1: We’re on track

Nortel Networks offered a mixed bag with its first-quarter financial report. The company’s net loss widened, but revenues were up and it said it is still on track to meet its 2008 targets.
Nortel’s stock initially surged on the report, but shares were trading down about 6% this morning.
The company reported a net loss of $138 million, or 28 cents per share, for the first quarter, an increase from net loss of $103 million, or 23 cents per share, during the first quarter of last year. Nortel’s first-quarter net loss was substantially better than the net loss of $844 million, or $1.70 cents per share, it reported for the fourth quarter.
Net loss for the quarter included special charges of $88 million for restructuring expenses, a loss of $19 million due to foreign exchange rate changes and a charge of $12 million related to patent litigation. The company also recorded a gain of $16 million related to interest rate swaps for the quarter.
The company noted revenues were up 11%, from $2.48 billion during the first quarter last year to $2.76 billion this year, but down 14% sequentially from $3.2 billion during the fourth quarter. Revenues included a release of deferred revenue associated with the completion of a contract from its LG-Nortel joint venture that was expected to occur during the second quarter.
The company’s carrier networks division recorded revenue growth of 21% year-over-year to $1.2 billion, but down 10% from the fourth quarter. Nortel said the division’s benefit from its LG-Nortel joint venture was partially offset by a slight decline in CDMA and legacy switching sales.
Nortel said its first-quarter results demonstrate continued progress toward its turnaround strategy and that it still expects to meet its full-year goals. The company said it expects revenues to grow in the low single digits compared with 2007.