Nortel Reports Smaller Loss as Sales Improve

Nortel Networks reported a smaller first-quarter loss on Thursday, as sales rose and the company booked an accounting gain related to a shareholder lawsuit.

Nortel, North America's biggest maker of telephone equipment, said it lost $103 million, or 23 cents a share, in the three months ended March 31. That was better than the loss of $171 million, or 39 cents a share, in the same period a year earlier.

The company said its net loss in the quarter included a $54 million gain related to an adjustment to the share portion of a class action settlement with its investors. It also included $80 million in restructuring charges.

As Nortel first announced earlier this week, its revenue rose 4% to $2.48 billion from $2.39 billion in the year-before quarter.

"It is very good to have the type of a start which we did have in the first quarter," chief executive Mike Zafirovski told analysts in a conference call.

He also said he was "very pleased" the company's gross margin as a percent of revenue was 40.4%, adding this was "the highest in seven quarters."

The company said the margin figure reflected a strong contribution from its wireless CDMA offering, as well as cost-cutting, and was up from 38.7% a year earlier.

Nortel is still working to turn around its operations by cutting costs and generating enough new revenue to become profitable.