Nokia Corporation (ADR) (NOK) Swings To Profit But Disappoints

Nokia Corporation (ADR) (NOK) Swings To Profit But Disappoints
Hermann / Pixabay

Nokia released the earnings results from its most recently completed quarter this morning, posting non-IFRS diluted profits of €0.05 per share on revenue of €3.2 billion, a 20% year over year increase. Analysts had been expecting earnings of €0.04 per share on €3 billion in revenue for the quarter.

Nokia’s Networks segment posts weak results

Nokia posted net losses of €0.06 per share or $239 million for the first quarter. Networks revenue increased 15% to €2.67 billion, beating the consensus estimate of €2.6 billion. However, the operating profit for the segment plunged 60% from €216 million last year to €85 million this year. The Networks business made up 80% of Nokia’s overall revenue.

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CEO Rajeev Suri called the Network segment’s profitability “unsatisfactory,” saying it was the result of more sales of hardware, which has lower margins, rather than software, which has higher margins. The Network’s business, which was supposed to become Nokia’s core business, fell from 9.3% to 3.2%, greatly missing the long term target of 8% to 11%. Despite the Network business’ weak performance, Suri remained confident in the segment.