The telecommunications giant will also take a $630 million charge as it continues to wrestle with a restructuring program.
Nortel said it would lay off 3,000 fewer employees than anticipated as part of the ongoing restructuring program. The company expects its total work force to be 52,000 by the end of this year with plans to cut that figure to 48,000 by the end of the restructuring, sometime next year.
The company also announced an extension of its credit facility from June to December, at the same time lowering the amount of credit it will receive from $2 billion to $1.575 billion.
"At the reduced level, we feel that the amount of this facility is appropriate for Nortel Networks in light of the progress we have made on our work plan, the results of our ongoing focus on cash management and our current cash position," Chief Financial Officer Terry Hingle said in a statement.
In the third quarter, Nortel posted a loss of $3.5 billion, with sales of $3.7 billion. In the year-ago fourth quarter, the company recorded a profit of $825 million, or 26 cents per share, excluding charges, on sales of $8.82 billion.
Nortel now expects to report revenue from continuing operations of $3.4 billion in this year's fourth quarter, slightly lower than analysts' expectations of $3.5 billion.
The company expects to post a net loss of 63 cents per share from continuing operations. Excluding $900 million in acquisition-related costs, the $630 million restructuring charge and other charges, the company said it expects to record a pro forma loss from continuing operations of 16 cents per share.
The pro forma loss is also less than analysts were expecting; a survey of Wall Street analysts by First Call produced a consensus estimate of an 18 cents per share loss.
Nortel is scheduled to report official fourth-quarter results on Jan. 17.
Nortel shares rose 77 cents Friday to close at $7.13.