Nortel Networks (NT: sentiment, chart, options) is nearly 7% higher at midday after the company confirmed its 2008 forecast for revenue growth and gross margin. CEO Mike Zafirovski told investors today that revenue is expected to rise in the low single-digit percentage range compared to 2007. Gross margin for the year is expected to be approximately 43% of revenue, and NT estimates that operating margin as a percent of revenue will rise by 3 percentage points.

In other Nortel news hitting the wires, the company entered a joint strategic WiMax agreement with Alvarion Limited. The partnership will integrate Alvarion's advanced radio access network technology with Nortel's core network and backhaul solutions, as well as its voice-over Internet protocol and professional services.

Today's spike higher has NT sitting atop its 10-week and 20-week moving averages, a trendline duo that the stock hasn't surmounted since November 2007.

The shares are down 46% year-to-date, but option activity is decidedly bullish of late. The International Securities Exchange (ISE) reports that the stock's 10-day call/put ratio is 30.11, indicating that traders have purchased more than 30 NT calls for every 1 NT put during the past 2 trading weeks.

This double-dose of positive fundamental news could encourage the bulls although NT is trading around $8.67 at last check, meaning the shares would need to rally some 44% before arriving at peak call open interest at the June 12.50 strike (with 21,918 contracts in residence). It appears that some of the stock's fans might have overly inflated expectations during the near term.