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Nortel meets analysts' expectations

Telecom equipment maker Nortel Networks reports first-quarter earnings, matching analysts' expectations.

Telecom equipment maker Nortel Networks today reported first-quarter earnings, matching analysts' expectations.

The Canada-based company said profit from operations was $222 million, or 33 cents a share, which is what analysts polled by First Call projected. In the year-ago period, the company made $140 million, or 27 cents a share.

Including charges of $692 million related to the company's acquisition of Bay Networks last year, Nortel posted a substantial loss of $470 million, or 71 cents per share for the quarter.

Revenue for the quarter rose 26 percent to $4.42 billion from $3.51 billion in the year-ago period.

The company said it saw strong order input in the quarter and is confident it will reach fiscal 1999 revenue and earnings growth targets.

"We expect 1999 revenue to be in the range of $21.5 billion to 22 billion and earnings per share growth from operations in the 20 percent range," Nortel CEO John Roth said in a statement.

As previously reported, Nortel said earlier this month it will acquire networking equipment start-up Shasta Networks in a cash and stock deal valued at $340 million. The company said the Shasta purchase would position it to realize new revenue streams by enabling carriers and service providers to deliver Intranet services, such as virtual private networks and firewalls.

In addition, the company said that demand by carriers and service providers for its data and optical networks services and products have grown. The company highlighted that through its joint venture with Arris Interactive, it has reached more than $100 million in equipment orders to date, providing cable telephony products. The company said communications giant AT&T had decided through TCI to use Arris.

For the quarter, geographic revenue increased 37 percent in the United States and 3 percent in Canada compared to a year earlier. The 15 percent growth outside Canada and the United States was driven by increases in both Asia-Pacific and Europe, the company said.

Shares of Nortel rose 2.31, or 3.2 percent, to 74.43 at yesterday's market close.