NEW YORK (Dow Jones) -- Nortel Networks Corp. on Friday reported a wider second-quarter loss as restructuring costs mounted.

The ongoing reorganization, which has included thousands of job cuts, is meant to boost long-term profitability, but Nortel also warned Friday that a weakening global economy poses "increasing risk."

In the second quarter, the Toronto-based vendor's net loss jumped to $113 million, or 23 cents a share, from a loss of $37 million, or 7 cents a share, a year earlier.

Revenue edged up 2% to $2.62 billion. Adjusted operating margin slid to 4.3% from 4.7% in the first quarter. Earlier this year Nortel said it was aiming to reach the 10% level at some point in 2008.

Excluding onetime items, Nortel would have lost 9 cents a share, the brokerage UBS calculated. Analysts surveyed by FactSet Research were expecting to company to lose, on average, 3 cents a share on $2.5 billion in revenue.

In premarket trades Friday, shares of Toronto-based Nortel fell as much as 7% from Thursday's closing price of $7.64. The stock has lost 49% of its value in 2008.

Equipment suppliers such as Nortel have been struggling for years to boost sales, but stiff global competition and shifting customer-spending patterns have limited growth.

Suppliers have responded by slashing jobs, moving operations to lower-cost locales like China and focusing on markets where the best opportunities lie.

Yet the weakening economy could put even more pressure on Nortel, the vendor acknowledged Friday, though it stuck with its prior forecast for 2008 of sales growth in the low single-digits, on a percentage basis.

"Nortel faces a challenging business environment with increasing risk," the company said in a statement.

The vendor also cited the potential of lower spending on CDMA wireless gear by a key North American phone company, most likely Verizon Communications Inc. The company said last week it would spend less on new equipment this year than it did in 2007.

During the quarter Nortel incurred $67 million in restructuring costs, a loss of $21 million largely from mark-to-market losses on interest-rate swaps and a one-time $34 million currency-related gain.

  (END) Dow Jones Newswires
  08-01-08 1054ET
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