Nokia CEO Rajeev Suri (pictured) said the company “ended 2016 positioned well for the future” following its integration of Alcatel-Lucent, although the picture was not altogether rosy.
In a statement, Suri said Nokia ended the year having shifted from being mobile-focused to covering a range of fixed, mobile and software sectors: “with solid opportunities to drive higher returns through expansion into new customer segments; with emerging businesses in digital health and digital media; and with greatly expanded patent and brand licensing activities”.
He also said there was growing customer support for its strategy, with an increasing share of its sales pipeline covering products and services from two or more business groups. “The potential of cross selling started to become a reality”, he said.
However, Q4 sales on a combined company (non-IFRS) basis declined 13 per cent from €7.7 billion to €6.7 billion, with sales in the Networks business down 14 per cent to €6.1 billion. The Networks weakness was attributed to challenging market conditions in Q4 2016, and a difficult comparison against a strong quarter for Alcatel-Lucent in 2015.
Sales in Nokia Technologies decreased 25 per cent to €309 million, largely due to the presence last year of an arbitration award against Samsung. This was partially offset by an extended licensing deal with Samsung and divested IPR, and the acquisition of wearables company Withings.
Combined company operating profit of €940 million was down 27 per cent from €1.3 billion. This was attributed to higher costs in areas including R&D, selling, general and administrative, partially offset by higher gross profit, all primarily related to the Alcatel-Lucent deal.
The fourth quarter of 2016 also saw Nokia initiating patent licensing complaints against Apple.
On a Nokia standalone basis (which excludes Alcatel-Lucent from the prior-year period), net income of €658 million was up 32 per cent year-on-year from €499 million, on revenue of €6.6 billion, up 84 per cent from €3.6 billion.