Thursday, October 27, 2016

Nokia Sees Softening Market Conditions, Especially Mobile Infrastructure

Nokia posted net sales (non-IFRS) in Q3 2016 of EUR 6.0 billion, down from EUR 6.4 billion on a comparable combined company basis for the same period a year ago.

"Nokia delivered solid third quarter results. Nokia Technologies led the way, with a sharp year-on-year increase in net sales, largely driven by revenues related to the Samsung licensing agreement that was announced in Q3. The results also reflect another excellent quarter from Fixed Networks, which improved both net sales and profitability from one year ago," stated Rajeev Suri, Nokia's President and CEO. "We were able to deliver these solid results despite market conditions that are softer than expected, particularly in mobile infrastructure. As we look forward, we expect those conditions to stabilize somewhat in 2017, with the primary addressable market in which Nokia competes likely to decline in the low single digits for that year."

Some highlights:

  • Nokia's Networks reported a 12% year-on-year net sales decrease. Net sales were weak in Mobile Networks within Ultra Broadband Networks, and accounted for approximately 80% of the overall decrease in Nokia's Networks business. IP Networks and Applications also contributed to the decrease, partially offset by growth in Fixed Networks within Ultra Broadband Networks.
  • Nokia Technologies reported a 109% year-on-year net sales increase and 168% operating profit increase in Q3 2016. Excluding the impact of non-recurring licensing income, Nokia Technologies net sales and operating profit both would have grown by approximately 50% year-on-year, primarily due to higher intellectual property licensing income and, to a lesser extent, increased net sales resulting from the acquisition of Withings.
  • Nokia and China Huaxin are continuing their discussions under the memorandum of understanding, as originally announced on August 28, 2015, to combine Nokia's telecommunications infrastructure businesses in China and Alcatel-Lucent Shanghai Bell into a new joint venture. A deal has not yet been reached.