Nortel Networks beat Wall Street analysts’ expectations in the first quarter, but part of its success has analysts suspecting a hard time for the vendor in the second half of the year, particularly in its Carrier Networks division.

Though Nortel’s first-quarter revenue was up 4% to $2.48 billion, the vendor reiterated its projection of flat to slightly negative revenue growth for the full year, suggesting that the best days of 2007 for Nortel may be in the first half of the year.

Nortel’s enterprise business—a growing emphasis amid Nortel’s ongoing business transformation—was particularly strong during the quarter. Enterprise revenue was up 31% from a year earlier to $597 million, or nearly a fourth of all revenue.

But much of Nortel’s first-quarter revenue came from CDMA Rev-A wireless deployments in North America, including Verizon Wireless and Sprint, that are expected to slow in the second half of the year. Revenue from CDMA was up 29% from a year earlier to $568 million in the first quarter, or 23% of total revenue. For the year, however, Nortel expects CDMA revenue growth to be in the single digits.

“In the back half of 2007, as these [CDMA] builds wind down, Nortel may need alternative revenue streams to offset the decline,” said Mark Sue, RBC Capital Markets analyst.

The company’s revenue growth was also affected by the recent sale of its UMTS access business to Alcatel-Lucent. Excluding the impact of that sale, total revenue was up 12% in the first quarter.

Other carrier businesses performed well in the first quarter, helped in part by revenue deferred from earlier periods. Revenue from metro Ethernet products was up 27% to $373 million, and that from optical gear was up 25% to $263 million.

But circuit and packet voice revenue was down 13% to $170 million. Nortel expects that business to rebound after slow North American spending in the first quarter. And GSM revenue was down 38% to $271 million.

“We remain concerned with the 50% of the business exposed to wireless, with GSM and CDMA revenues expected to decline over the next few years and with limited meaningful traction gained by Nortel in WiMax,” UBS Investment Research analyst Nikos Theodosopoulos wrote in a research note published today. “We continue to look for further evidence of either revenue acceleration in this segment or for Nortel to de-emphasize wireless over time and further bulk up its enterprise, Metro Ethernet, or services offerings.”