Nortel Beats on Revenue; Shares Rise

The stock is jumping 8.5% to $9.44 in early trading.
By Robert Holmes ,

Nortel Networks

(NT)

posted a loss in the first quarter that ballooned from a year earlier, but shares were buoyed by a rise in revenue.

The Toronto-based telecom-equipment giant said it had a loss of $138 million, or 28 cents a share, in the first quarter. Those numbers widened from a loss of $103 million, or 23 cents, a year ago, but shrank from a fourth-quarter loss of $844 million, or a $1.70 a share.

Nortel said the loss in the first quarter included charges of $88 million for restructuring, a loss of $19 million due to changes in foreign exchange rates, a charge of $12 million related to a patent lawsuit settlement and a gain of $16 million, primarily from mark-to-market gains on interest rate swaps.

On a bright note, sales rose 11.3% from a year ago to $2.76 billion. Wall Street wanted to see sales of $2.49 billion. Shares of Nortel were jumping 8.5% to $9.44 in early trading.

Nortel's gross margin rose to 41.6% from 40.4% in the year-ago quarter, but was down from 43.7% in the fourth quarter.

Looking ahead to 2008, Nortel reaffirmed its forecast that revenue should grow in the low single digits compared to 2007. The company added that gross margin should be 43% of revenue this year.

"We expect to achieve our full-year guidance, and we continue to make solid progress against the strategy to turn around the company," said Nortel CEO Mike Zafirovski. "Our relentless focus on execution and our determination to deliver value to customers is strengthening the foundation upon which to build our performance over the balance of 2008 and beyond."

Among other networkers and telecom stocks,

Cisco

(CSCO) - Get Report

was up 1.2% in the premarket,

Alcatel-Lucent

(ALU)

was gaining 0.3%, and

Motorola

(MOT)

was advancing 0.5%.

Ericsson

(ERIC) - Get Report

, though, was falling 3.6%.

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