TORONTO – Nortel Networks Corp. is down almost 8% after the Canadian network-equipment vendor said it now expects revenue in 2004 to grow at a slower rate than the overall market, a possible sign that competitors could be winning an increasing share of the wireless network equipment market.

As part of its latest financial status update, which Nortel is required by the Ontario Securities Commission to issue biweekly, the company said it expects its revenue percentage growth in 2004 to be in the mid-single digits and the rate for the overall communications equipment market to be faster than that.

Previously, Nortel has maintained that its revenue would increase at a faster rate than the overall market. However, that was based on the company’s view that the overall market would grow in the low to mid-single digits, as opposed to the current outlook of more than mid-single digits.

Demand for wireless network gear has been the main growth driver for Nortel and its main rivals, reflecting the increasing use of wireless devices for voice and data services. However, the pace at which Nortel has signed new contracts has shown signs of slowing, said Paul Sagawa, an analyst at Sanford C. Bernstein & Co. Sagawa doesn’t own Nortel stock, but his firm does.

Early on, Nortel had the lead developing equipment for the core of next generation or 3G wireless networks, however its rivals can now match this capability, Sagawa said.

A spokeswoman for Nortel declined to comment on the reasons for Nortel’s view that its revenue will grow at a slower rate in 2004 than that of the overall market. Tina Warren would only say that the company now expects the overall market to grow faster than previously thought, largely because of demand for wireless network equipment.

Sagawa said Nortel’s latest financial guidance shouldn’t come as a surprise. If Nortel’s revenue was growing strongly, the company likely wouldn’t have announced last month plans to lay off 10% of its workforce, he said.

Nortel also said its revenue for the third quarter would come in below its previously announced, unaudited second-quarter revenue of $2.6 billion.

But that shouldn’t come as a surprise analysts said.

“At face value, this statement isn’t a surprise as (the third quarter) usually has some weakness,” an analyst at National Bank Financial, Tom Astle, wrote in a note. At the same time, Mr. Astle suggests the news could be an indication that the third-quarter revenue results are “below even normal seasonal weakness.”

Mr. Astle doesn’t own the stock, and his firm hasn’t had an investment banking relationship with Nortel in the last 12 months.

In New York yesterday, Nortel was down 30 cents to $3.50.