UTStarcom (UTSI) - Get Report posted a stronger-than-expected first quarter but guided lower for the second quarter.

The Alameda, Calif., wireless gear company lost $11 million, or 9 cents a share, for the quarter ended March 31. That reverses the year-ago profit of $37 million, or 29 cents a share. Sales fell to $597 million from $902 million a year earlier.

Analysts surveyed by Thomson Financial were looking for a 68-cent loss on revenue of $518 million.

"While there is still a lot of work to be done, we are pleased with our solid first quarter results," said finance chief Fran Barton. "We believe they demonstrate progress toward our planned improvements to gross margins, expenses and cash-flows."

Cash flow from operations was $54 million in the latest quarter and gross margin was 20.5%.

But the company said it would slip deeper into the red in the second quarter as margins slide. UTStarcom forecast a second-quarter loss of around 50 cents a share on revenue of $560 million or so, with gross margin of 16%, give or take a point. Analysts were looking for a 44-cent loss on revenue of $581 million.

Late Wednesday, UTStarcom fell 9 cents to $6.29.