RESEARCH TRIANGLE PARK, N.C. – To say that the crystal ball is fuzzy about Nortel’s future is quite true, based on what analysts are saying about the troubled telecommunications gear manufacturer.

Some views are harsh.

“We are downgrading shares of Nortel to a Neutral Weight from Overweight,” said Prudential Equity Group in a note issued Wednesday.

Due in large part to a settlement related to litigation, Nortel (NYSE: NT) did report a profit for the second quarter this week. It has cleaned up the books, reached a settlement for class-action lawsuits and put in place a management team hand-picked by Mike Zafirovski, a noted turnaround exec.

But the Prudential Equity folks aren’t drinking Mike Z’s Kool-Aid, however.

“The company’s restructuring execution appears insufficient to meet profit targets,” the note reads. “Nortel’s new management team outlined a series of restructuring goals and profitability improvements … However, the announced restructuring actions do not appear sufficient to meet these goals, and industry consolidation around Nortel only raises the stakes higher.”

Nortel’s hometown media didn’t flinch, either.

“An accounting gain related to a shareholder lawsuit settlement allowed Nortel Networks Corp. to post a profit in the second quarter, but the underlying picture reflects the company’s struggles to improve its performance,” said The Globe and Mail in Toronto.

Not everyone is writing Nortel off. BusinessWeek, for example, titles its latest story about Nortel based on the earnings report as: “Nortel: ‘Here To Stay’”

“The numbers suggest Nortel is gaining share in an increasingly competitive phone-equipment arena, says Albert Lin, an analyst at American Technology Research,” BusinessWeek reported. “That’s impressive in this environment,” the article quoted Lin as saying.

Should Nortel decide to sell its universal mobile telecommunications systems business unit as has been rumored, some analysts might be appeased.

“We are encouraged that Nortel is rethinking its business operations from a strategic point of view. In a consolidating industry Nortel is taking a fresh perspective on how the company can divest weak segments while fortifying core competencies,” said RBC Capital Markets analyst Mark Sue in a report picked up by Forbes.

Robert W. Baird analysts, meanwhile, reaffirmed on Friday their “neutral” rating on Nortel’s stock.

Target price: $2.

Not exactly a stirring endorsement, eh?