The economy is bad and we all know it, but Northern Telecom is not happy. Nortel’s Carrier Networks group, which houses its carrier VoIP service and Application Solutions division, saw revenues slip to $737 million, down 32 percent year-over-year and 48 percent from the previous quarter, according to first-quarter financial results released today.

While Nortel blamed much of the decline on its wireless segments, it’s likely that Nortel’s Chapter 11 bankruptcy proceedings impacted the VoIP part of the group’s earnings as well, as every division of the company saw a marked revenue decline for the quarter.

Company-wide, Nortel reported a net loss of $507 million for the quarter, as its $1.73 billion in revenue was off more than $1 billion from the $2.76 billion it recorded in the first quarter of 2008. The company said it is still in the midst of reorganizing its divisions, and it will begin reporting Carrier VoIP and Application Solutions earnings as a separate segment beginning in the third quarter of 2009.

On a bright note, the company announced that it has sold more than 1,000 units of its Business Communication Manager 450 product, which provides unified communications capabilities for small- and medium-sized businesses, since its launch in October 2008, making it the fastest-selling product in company history.