Amid continuing problems with the release of its financial statements, Nortel reported a loss for this year's third quarter, coupled with a drop in sales from the second quarter, but added that it expects improvements in fourth-quarter revenue.

The Brampton, Ontario-based network gear maker is the subject of criminal and regulatory investigations by the Ontario Securities Commission and the U.S. Securities and Exchange Commission (SEC) regarding the restatement of financial results back to 2001. Due to the work involved in the restatement, the company had not filed financial statements for any quarter this year until Tuesday. Nortel still expects to restate those financial reports on Jan. 10.

For the third quarter, Nortel said it had a "limited estimated unaudited" loss of $0.06 per share on revenue of $2.3 billion, down from about $2.6 billion in the second quarter. The company did not include comparable figures from a year earlier.

The quarterly loss included about $0.03 per share in costs associated with the $500 million wireless contract it secured from Bharat Sanchar Nigam Ltd. (BSNL), the largest telecommunications company in India, Nortel said. Additionally, restructuring charges of about $0.02 per share had a negative impact on its bottom line. Those losses were slightly offset by a gain of $0.01 per share on the transfer of some assets of Nortel's directory and operator services business to a joint venture in return for a minority equity interest in the venture, the company said.

Nortel said its customer support remains strong despite its ongoing restatement activities and the internal restructuring and realignment programs the company began in August.

As a result, Nortel forecast revenue in the range of $2.8 billion to $2.9 billion for the fourth quarter and revenue between $10.1 billion to $10.2 billion for the full year 2004.

The IDG News Service is a Network World affiliate.