Nortel Networks reported $2.9 billion in revenue for the second quarter, a 10% increase from last year’s second quarter and a 13% increase from this year’s first quarter. Overall net income was about one cent per share.

Nortel chief executive Bill Owens called it an “acceptable” quarter, reiterating the company’s expectation of 10% revenue growth for the full year 2005. “It feels like we’re going to have an OK year,” he said.

The company attributed its second-quarter revenue gain mainly to growth in enterprise markets--which grew 26% from a year earlier to $730 million--and CDMA wireless sales, which jumped 24% sequentially to $662 million, driven largely by EV-DO deployments from Verizon Wireless, Sprint PCS and others. Nortel also identified metro optical as an area of “substantial growth” in the quarter that, along with sequential gains in voice over IP, were nevertheless offset by declines in legacy TDM and long-haul products.

The company also cited GSM and UMTS wireless sales as a weak point in the quarter, as slowdowns in Europe, Africa and North America led to revenue growth of only 1% from a year earlier. Nortel, which holds roughly 10% of the global GSM and UMTS equipment market, is actively looking for partners to help it serve that business, Owens said, expecting it to grow in 2006.

Meanwhile, Nortel is continually trying to reduce its costs, including in research and development. The company is working to reduce by half the number of cities in which it currently has research facilities. Its R&D expenses were $479 million in the second quarter, up 1% sequentially but down nearly 3% from a year earlier.

Among other things, Owens stressed the importance of security services to the company’s future, identifying even residential broadband markets as fertile ground for the hosted security business.

“You have to be in the network before you can architect it to the complete capability that’s possible,” Owens said of the security business, making the case that Nortel has an advantage there, being only one of a few entrenched network equipment vendors that have well-established carrier and enterprise security businesses.

The company’s earnings report was originally scheduled for Wednesday of last week but was postponed on short notice.