Nortel estimates its sales will grow 10% during 2005

It continues to face accounting probes, but said net profit for the quarter was $45m (�25m), up from $16m a year ago.

Both profits and sales beat expectations. Sales were up 10% to $2.86bn, ahead of analysts' average forecasts of $2.69bn.

It expects 2005 sales to grow 10%. Nortel shares rose 13% in early trade.

Revenue strong

Nortel said it incurred second-quarter restructuring charges of $90m, and $39m in costs related to sales of firms and assets.

Adjustments to previous quarters also reduced profits in the second quarter, the firm said.

Sales to telecoms carriers rose but not as much as sales to enterprises

"The growth rate of 10% - and frankly I think it's likely to be slightly larger than 10% versus less than 10% - is understandable if you take into account the PEC acquisition and the BSNL contract," said Steve Levy, an analyst at Lehman Brothers.

Nortel announced in June that it had completed its acquisition of PEC Solutions, a $448m deal designed to increase its share of US government business.

It said it would also be recognising revenue from a $500m deal with Indian telecoms firm Bharat Sanchar Nigam, it signed last year.

Wires humming

During the second quarter, sales of equipment to telecoms carriers were up 3% compared with the year-ago second quarter, while equipment sales to large companies for their enterprise networks were up 26%.

Sales of infrastructure equipment for mobile networks conforming to the Global System for Mobile (GSM) and third-generation standards popular in Europe were up 1%.

But sales of mobile equipment conforming to the code division multiple access (CDMA) standard were up 17%, compared with the year-ago quarter.