Nokia reported uninspiring results for the third quarter of 2016, with Rajeev Suri noting “market conditions that are softer than expected, particularly in mobile infrastructure”.
And the CEO said that while the current quarter is “expected to be soft from a topline perspective”, the company is “on track in our execution and focused on creating value for our customers and shareholders”.
Of course, the company is not alone in suffering in this sector, with peer Ericsson similarly challenged.
Nokia saw a 12 per cent drop in sales at its Networks unit to €5.3 billion, with it stating that “consistent with our outlook for the wireless infrastructure market, net sales were weak in Mobile Networks”. Non-IFRS operating profit of €432 million was down 18 per cent.
The company saw sales falls across-the-board geographically.
While radio network weakness related to certain customers in Asia Pacific, Greater China and Europe was partially offset by growth in North America, it was accompanied by decreases in its services business related to customers in North America, Latin America and Europe.
There were some pluses on the fixed line side: its broadband access business saw gains related to a large project in APAC “which is nearing completion”, with digital home strength in North America and Latin America.
Nokia Technologies boost
Nokia Technologies saw its sales double to €353 million, with operating profit increasing 168 per cent to €225 million.
This unit benefited from a new licence agreement with Samsung, which was announced in Q3 and, “to a lesser extent”, the Withings acquisition.
The company reported a loss for the period of €133 million, compared with a prior-year profit of €188 million, on revenue of €5.9 billion, up from €3 billion – although the comparison figures are for Nokia as a standalone business.
Using non-IFRS figures provided by Nokia for a combined company comparison, operating profit of €556 million was down 18 per cent year-on-year, on revenue of $6 billion, down 7 per cent.
Nokia said that due to “complexity” in negotiations, it has not yet been able to create a new venture combining Nokia China and Alcatel-Lucent Shanghai Bell – a move originally announced on 28 August 2015.
It had been expected an agreement would be reached within nine months of the Nokia/Alcatel-Lucent deal, but it has still not reached a final agreement with China Huaxin, its partner in the venture. At the moment, it is continuing to operate under an existing interim agreement.
Nokia also announced the departure of its CFO, Timo Ihamuotila, who is leaving to become CFO of Swiss engineering firm ABB. He will be replaced by Kristian Pullola, Nokia’s current SVP and Corporate Controller.
Speaking of Ihamuotila, Suri said: “He was instrumental in the purchase of the Siemens share of Nokia Siemens Networks; the sale of Nokia’s Devices & Services business to Microsoft; the divestment of Here, our former mapping business; the recent acquisition of Alcatel-Lucent, and more. He has also played an important role in driving the strong performance of Nokia in recent years.”