Nokia Reports Q4 Earnings; Shares Fall

The shares of Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) declined in the morning trading on Thursday after the company reported weak financial results for the fourth quarter. The stock price of the company declined by more than 9% to as low as $6.93 per share in New York.

Nokia financial results

The Finnish company reported that its revenue for the fourth quarter declined 21% from €4.41 billion to €3.47 billion. Its operating profit dropped 17% from €329 million to €274 million. Its earnings per diluted share fell from €0.10 to €0.08 per share.

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Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) posted that the sales of NSN dropped 22% to €3.1 billion. The company explained that the decline was partly because of some divestments and its decision to avoid some less profitable contracts. The operating profit of the business declined 4% to €243 million, and the operating margin was 7.8%.

The Finnish company said its HERE business generated €254 million, down by 9%. Its operating profit and operating margin improved to €18 million and 7.1%, respectively.

The Advance Technologies business of Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) delivered €121 million, a decline of 9%. Its operating profit and operating margin also fell to €65 million and 53.7%, respectively.

Profit margin forecast

Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) also predicted to deliver lower profit margins for its network equipment business, Nokia Solutions Network (NSN). The company estimated that the operating profit of its network business will decline 1% to 9% of sales for the current quarter from 11.2% in the previous quarter.

Sami Sarkamies, analyst at Nordea Bank AB (STO:NDA-SEK) in Helsinki, projected that the profit margin of the company’s network unit will be around 7.6%. According to Sarkamies, “The big question is, how do they plan to grow NSN’s margin from the first quarter while aggressively going after sales?”

Patent licensing

Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) projected that its income from patent licensing will increase to €600 million from its current annual rate of €500 million. Some analysts predicted that the company will generate higher profit from its patent licensing this year.