Nortel Disappoints Again

Nortel disappointed investors once again Tuesday with earnings and sales that were below Wall Street estimates.

Nortel reported a loss of $167 million for the first quarter, or 4 cents a share, on sales of $2.38 billion, down slightly from the year-ago quarter. Analysts were looking for a loss of a penny a share on sales of $2.54 billion. Gross margins were also weaker than expected.

If there was a silver lining in the report, it’s that Nortel has finally gotten caught up after three years of financial restatements. The company also reaffirmed forward guidance.

“I am pleased to be current in our financial reporting,” CEO Mike Zafirovski said in a statement. “While our results reflect a challenging first quarter, we continue to expect good revenue and operating margin momentum commencing in the second quarter, in line with our previously communicated full year plan. We remain focused on our business transformation initiatives, integrity renewal and short term growth opportunities, while concurrently building the long-term foundation for the new Nortel.”

Nortel shares lost 2.6% Tuesday.

The broader market was under pressure once again on fears of rising interest rates and slowing economic growth, but finished well off their worst levels of the day. Helping the mood was conciliatory comments out of Iran.

The Nasdaq lost 7 to 2162, the S&P 500 shed 1 to 1263, and the Dow lost 46 to 11,002. Volume rose to 2.69 billion shares on the NYSE, and 2.16 billion on the Nasdaq. Decliners led 20-11 on the NYSE, and 18-12 on the Nasdaq. Downside volume was 67% on the NYSE, and 66% on the Nasdaq. New highs-new lows were 28-136 on the NYSE, and 53-142 on the Nasdaq.

Onyx jumped 12% on a buyout offer.

OpenTV surged 13% on a deal with Time Warner .

Brightpoint plunged 18% on a Deutsche Bank downgrade.

Cognos lost 4% after delaying its earnings results.

International Rectifier and Spansion fell on debt offerings.