Nortel's Loss Widens; Shares Plummet

Nortel said that accelerated growth in its enterprise and metro ethernet businesses in the second half and the expected completion of wireless contracts in the fourth quarter, representing approximately $350 million of previously deferred revenue, are "key to the company achieving its financial objectives for this year."

Still, Nortel reaffirmed its forecast that revenue should grow in the low single digits compared with 2007. The company added that gross margin should be 43% of revenue this year.

"Nortel's financial performance in the first half of 2008 has been consistent and disciplined," Zafirovski said in a statement. "We have achieved our objectives and are on track to meet our targets for the year."

Nortel's guidance is slightly more positive than that of Alcatel-Lucent (ALU Quote), which Tuesday said that it expects full-year revenue to be down in the low- to mid-single-digit range.

Alcatel-Lucent's guidance was tacked onto its second-quarter earnings report, its sixth consecutive quarterly shortfall, released on the same day embattled CEO Pat Russo and Chairman Serge Tchuruk said they would leave the company. Shares of Alcatel were down 0.2% to $6.

Among other networkers and telecom stocks, Motorola (MOT Quote) was flat, and Cisco (CSCO Quote) was off 0.3%. Ericsson (ERIC Quote) was adding roughly 1%.