Citing a sustained and expanding economic downturn, Nortel Networks said today that it has cut its full-year revenue forecast for 2008 to between 2 percent and 4 percent less than last year.

Nortel said in June that it expected its revenue to grow by a single-digit percentage.

Nortel also announced its third-quarter revenue will be about $2.3 billion, while analysts polled by Thomson expected revenue of $2.66 billion.

The downturn in the economy has caused some of Nortel’s enterprise and Metro Ethernet customers to defer new IT and optical investments, Nortel said.

"It is clear that the business environment in which we operate requires additional immediate and decisive actions," said Nortel President and CEO Mike Zafirovski. "A comprehensive review of our business is taking place, and we are determined to reshape the company to maximize its competitiveness, drive a significant increase in effectiveness and efficiency company-wide, and re-focus to establish a clear path for growth, profitability and renewed shareholder value."

As part of its review, Nortel is looking at the sale of its Metro Ethernet Networks unit, which includes carrier Ethernet and optical portfolios.

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