Nortel also completed restatements of results for the first nine months of 2006 and the years 2005 and 2004. The company had delayed the filing of 2006 results earlier this month due to accounting errors largely tied to pension and post-retirement plans.
The fourth-quarter loss compared with a year-earlier loss of $2.3 billion, or $5.30 a share, which included a litigation expense of $2.5 billion.
Revenue climbed 10 per cent to $3.32 billion.
Enterprise division sales rose 61 per cent and metro Ethernet sales climbed 18 per cent, while mobility division sales fell 5 per cent and global services sales were up 2 per cent.
Nortel reported a 2006 profit of $28 million, or six cents a share, on revenue of $11.42 billion, compared with a year-earlier loss of $2.6 billion, or $6.02 a share.
Nortel's fourth-quarter operating margin of 4.2 per cent was up from 1.4 per cent a year earlier and the highest in eight quarters, said Nortel president and chief executive officer Mike Zafirovski.
"There is a significant amount of work left to be done, but today Nortel is stronger than it has been in years," he said in a statement.