Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) released its first quarter earnings early this morning, posting €2.66 billion ($3.68 billion) in revenue. Net losses amounted to €239 million, which is a slight decline from last year’s losses of €272 million for the quarter.
Nokia’s revenue falls
The Finnish company’s revenue skidded 15% year over year, mostly due to a 17% decline in sales in its mobile network operations. That segment makes up nearly 90% of Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s revenue now that Microsoft Corporation (NASDAQ:MSFT) owns the company’s handset division.
Although sales in Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s network division fell, The segment did increase profitability due to better sales mix, as the company sold more software, which carries a higher margin. The network segment reported a 39.6% gross margin, which is an increase from 34% last year.
Nokia restructures
Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s handset division was listed under the company’s discontinued operations. Sales from that segment fell 30% to €1.92 billion. The company said operating losses for the division increased to €326 million, compared to losses of €73 million in the same quarter a year ago. Without the impact of the handset division, the company would have reported €108million in profits, compared to last year’s €98 million losses in the same quarter last year.
Some of the decline in Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s network segment revenue was due to restructuring. The segment has divested other parts of its business, including its optical networks, according to MarketWatch. The goal is to focus only on equipment for mobile broadband networks.
Nokia appoints next CEO, returns capital
As expected, Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) has named network chief Rajeev Suri as its next CEO. Suri succeeds Risto Siilasmaa, the company’s chairman, who had also been serving as interim CEO since Stephen Elop stepped down amidst the sale of the devices division. He went to Microsoft Corporation (NASDAQ:MSFT) along with that sale.
In addition, the company is distributing €1 billion ($1.4 billion) in special dividends in the wake of the closing of the deal with Microsoft Corporation (NASDAQ:MSFT). That amounts to about €26 a share.
Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is also beginning a €125 billion share buyback program as it tries to bring its credit rating back up to investment grade.
