Light Reading
Nokia's three remaining business lines, including Networks, unveil stable financial numbers for the second quarter and expect a positive second half of the year.

Nokia Holds Steady in Q2, Raises Outlook

Ray Le Maistre
7/24/2014
50%
50%

In a week of turmoil for the Finnish technology sector, the new-look Nokia, which began its new life in late April, has provided some stability with the publication Thursday morning of its second-quarter financials and outlook for the rest of the year. (See Nokia Ushers In New Era, Retires NSN Name.)

With much of the recent focus on the job cuts at the former mobile devices business, Nokia Corp. (NYSE: NOK)'s three remaining business units have not only delivered solid if unspectacular results, but have also given cause for conservative optimism as operating profits continue to creep up. (See Expect Further Cuts at Microsoft Devices – Analyst and Microsoft to Axe 12,500 Ex-Nokia Employees.)

Nokia reported second-quarter revenues of €2.94 billion (US$4 billion), down 7% from a year ago (mainly due to strategic exits from certain areas of business) and up 10% sequentially. Its gross margin (before the impact of one-time costs) was steady at 44%, while operating profits were up significantly compared with a year ago at €284 million ($383 million) and were much better than anticipated.

Table 1: Nokia Q2 2014 Key Financials

In Euros millions Q2 2014 Q2 2013 Change Q1 2014 Change
Revenues 2,942 3,155 -7% 2,664 10%
-- Of which Networks 2,566 2,781 -8% 2,328 10%
-- Of which HERE 232 233 0% 209 11%
-- Of which Technologies 147 145 1% 131 12%
Gross margin 44.0% 43.6% Increase of 0.4 of a percentage point 45.7% Decrease of 1.7 percentage points
Operating profit 284 12 Massive! 242 17%
Source: Nokia

Nokia Networks , which accounts for 87% of sales, reported revenues of €2.57 billion ($3.5 billion), down 8% from a year ago. That decline is largely due to the company's decision to exit unprofitable professional services deals: Global Services revenues decreased by 19% to €1.19 billion ($1.6 billion) compared with the second quarter of 2013, while Mobile Broadband infrastructure revenues were up 6% from a year ago at €1.36 billion ($1.83 billion).

The company added that excluding currency exchange fluctuations and the divestment/exit of various accounts and business lines, like-for-like Networks revenues would have been up by 1% from a year ago.

The vendor said the year-on-year increase in mobile broadband revenues was attributable to "strong net sales growth in both LTE and core networks," partially offset by lower sales of 2G and 3G radio access equipment. Nokia also noted that revenues were "adversely affected by shortages of certain components," but that the impact was not as bad as in the first quarter.

On a geographic basis, Networks revenues were down in most regions compared with a year ago, with Asia-Pacific and China in particular the exceptions: Second-quarter revenues in China increased by 18% year-on-year to €306 million ($412 million) due to the roll-out of LTE TDD networks.

The vendor says it "further strengthened its position as the top non-Chinese vendor" for 4G network rollouts in China by becoming "the only non-Chinese vendor to win a double-digit unit share in the second phase" of China Mobile's LTE TDD tender. (See Nokia Networks Boasts China Mobile 4G Deals.)


Want to know more about 4G LTE? Check out our dedicated 4G LTE content channel here on Light Reading.


Now Nokia expects its infrastructure business to pick up momentum. The company said it expects Networks revenues to be better during the second half of 2014 compared with the same period a year earlier, and believes its operating profits will exceed previous expectations. There are a number of factors expected to affect Nokia's second-half revenues, including "a higher proportion of major new network deployment projects."

And as if to hammer home that point, the company also announced Thursday morning a three-year 4G infrastructure and professional services deal with Telefónica SA (NYSE: TEF), which will see Nokia Networks act as the "key supplier" in the regions of Andalusia, Galicia, Castilla Leon and Levante.

Investors liked that positive outlook, as Nokia's share price jumped by 7.5% to €6.15 in morning trading on the Helsinki exchange.

Revenues at Nokia's other two businesses, HERE (mapping and location applications) and Technologies (intellectual property licensing) were in line with a year ago.

Two of Nokia's key rivals, Ericsson and Huawei, have also unveiled financial details during the past week. (See Ericsson Leaps on Q2 Margin Boost , Ericsson's Network Boss Outlines Top Priorities, Huawei Boosts H1 Revenues by 18% and Huawei Unveils H1 Revenues.)

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

(21)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Page 1 / 3   >   >>
Kruz
50%
50%
Kruz,
User Rank: Light Sabre
8/20/2014 | 9:08:55 AM
Re: Unspectacular, but....
What is certain is that Nokia employees do.
pcharles09
50%
50%
pcharles09,
User Rank: Light Beer
8/19/2014 | 5:25:39 PM
Re: Unspectacular, but....
@Kruz,

I wonder if Nadella rues the day MSFT acquired the Nokia units.
Kruz
50%
50%
Kruz,
User Rank: Light Sabre
8/2/2014 | 1:57:30 AM
Re: Unspectacular, but....
I do blame both, Nokia for failing to go with the Android trend and MSFT for hijacking Nokia, in a way, leaving the company with few choices.
pcharles09
50%
50%
pcharles09,
User Rank: Light Beer
7/31/2014 | 7:24:24 PM
Re: Unspectacular, but....
@Kruz,

MSFT was slow to adapt too as well as get into the mobile game. I guess the two were made for wach other.
Kruz
50%
50%
Kruz,
User Rank: Light Sabre
7/31/2014 | 9:53:42 AM
Re: Unspectacular, but....
Nokia thought it was a flagship device, consumers didnt follow. Nokia/MSFT has yet to understand the changing needs of the market. 920 is bulky and you could feel it in the pocket, for example. Nokia was too slow to adapt for example.
pcharles09
50%
50%
pcharles09,
User Rank: Light Beer
7/31/2014 | 9:33:54 AM
Re: Unspectacular, but....
@Kruz,

Alot of people thought that 'flagship' device was going to be the Lumia 920. I don't think that turned out to be the case so they're back to the drawing board... again.
Ariella
50%
50%
Ariella,
User Rank: Light Sabre
7/30/2014 | 2:27:22 PM
Re: Unspectacular, but....
@Liz makes sense. One type phone does not fit all. 
Liz Greenberg
50%
50%
Liz Greenberg,
User Rank: Light Sabre
7/30/2014 | 1:20:15 PM
Re: Unspectacular, but....
@Ariella, as I said to Kruz this really needs to be a focus for MSFT.  The perception that their products are either behind, too difficult, unstable or whatever has to be overcome.

Case in point, I took a friend to get her first smartphone.  Her son was convinced that she should get an Android device.  Luckily I had taken her shopping a week before and told her, "Try every device and see what one clicks with your brain.  One of them will be superior to you."  She soundly rejected Apple it was too hard for her eyes and her fingers (she is 62 and Taiwanese).  She then tried all the Android products, easier for her eyes and fingers but it didn't make sense to her.  So then she tried the various Nokia devices and ended up loving the 1520, it worked for her eyes, her fingers and her brain. 

Her son thought she was nuts and would never learn something "so difficult to use".  Fast forward, she loves it, enjoys learning all the things that it can do, texts with her kids and family, uses the mapping etc. 

A long post but the point is that MSFT needs to find a way to appeal to people by making the obvious obvious (not a typo).  Every OS exists for a reason and has capabilities that the others do not.  It is up to the manufacturers to make them known.
Liz Greenberg
50%
50%
Liz Greenberg,
User Rank: Light Sabre
7/30/2014 | 1:13:03 PM
Re: Unspectacular, but....
You are absolutely right @Kruz...MSFT has everything to lose if they can't convince the average user that their products are equal to or better than their competition.  Unfortunately, I don't think that they have hired anybody who can figure out how to make their products "cool" to the younger set that has been weaned from birth on Apple or Android products.
Ariella
50%
50%
Ariella,
User Rank: Light Sabre
7/30/2014 | 12:59:09 PM
Re: Unspectacular, but....
@Liz you touched on the sad reality that you can have a superior product but still not sell it well just because of the marketing. 
Page 1 / 3   >   >>
Educational Resources
sponsor supplied content
Educational Resources Archive
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Custom TV
Advantech Accelerates 100G Traffic Handling

10|17|14   |   7:56   |   (0) comments


Paul Stevens from Advantech explains why handling 100GbE needs a whole new platform design approach and how Advantech is addressing the needs of equipment providers and carriers to give them the flexibility and performance they will need for SDN and NFV deployment.
LRTV Huawei Video Resource Center
Holland's Imtech Traffic & Infra Discusses Huawei's ICT Solution and Services

10|16|14   |   4:49   |   (0) comments


Dimitry Theebe is from the business unit at Imtech Traffic & Infra which delivers communications solutions for transportations. His partnershp with Huawei began about a years ago. In this video, Theebe speaks more about this partnership and what he hopes to accomplish with Huawei.
LRTV Huawei Video Resource Center
Huawei's Comprehensive Storage Solutions Vital for SVR

10|16|14   |   6:16   |   (0) comments


SVR Information Technology provides cloud services for academic and special sectors. With Huawei's support, SVR and Yildiz Technical University has established Turkey's largest and most advanced High Performance Computing system. CSO Ismail Cem Aslan talks about what he hopes Huawei's OceanStor storage system will bring for him.
LRTV Huawei Video Resource Center
Mexico's Servitron's Impression of Huawei at CCW 2014

10|16|14   |   6:35   |   (0) comments


Servitron is a network operator in Mexico that has been in the trunking industry for the past 20 years. Its COO, Ing. Ragnar Trillo O., explains at Critical Communications World 2014 that his company has been interested in the long-term evolution of LTE technology and its adoption for TETRA.
LRTV Huawei Video Resource Center
Building a Better Dubai

10|16|14   |   2:06   |   (0) comments


Abdulla Ahmed Al Falasi is the director of commercial affairs, a telecommunications coordinator for the government of Dubai. Their areas of service span across multiple industries, including police, safety, shopping malls and more. In this video, Abdulla talks about his department's work with Huawei.
LRTV Huawei Video Resource Center
Huawei Lights Up Malaysia Partner Maju Nusa

10|16|14   |   1:59   |   (0) comments


Malaysia's Maju Nusa is an enterprise partner to Huawei in networking, route switches and telco equipment. At this year's Critical Communications World in Singapore, CTO Pushpender Singh talks about what Huawei's eLTE solutions mean to his company and for Malaysia.
LRTV Custom TV
Evolving From HFC to FTTH Networks

10|15|14   |   2:19   |   (0) comments


Cisco's Todd McCrum delves into the future of cable's HFC plant, examining how DOCSIS 3.1 and advanced video compression will extend its life and how the IP video transition will usher in GPON and EPON over FTTH.
LRTV Custom TV
Exploring the Future of Cable Access

10|15|14   |   6:23   |   (0) comments


Cisco's Brett Wingo looks at where cable access architectures are heading, discussing the impact of DOCSIS 3.1, CCAP, Remote PHY, SDN, virtualization of cable networks and related technologies.
LRTV Custom TV
Optimizing & Monetizing WiFi

10|15|14   |   5:53   |   (0) comments


Cisco's Vince Pandolfi outlines the reasons for cable WiFi's rapid growth, lays out the issues with the technology and explains the new Cisco tools that can help operators monitor and improve their WiFi delivery.
LRTV Huawei Video Resource Center
Emulex & Huawei Collaboration Mutually Beneficial

10|14|14   |   4:17   |   (0) comments


US company Emulex collaborates with Huawei in areas such as blade servers and workload documentation. Mike Heumann of Emulex believes that Huawei has done incredibly well moving from a telecom company into servers and networks, working closely with customers to realize their needs.
LRTV Huawei Video Resource Center
Chile's VZION Looks Forward to Seeing More of Huawei

10|14|14   |   4:43   |   (0) comments


VZION is a systems integrator company in Chile with a focus on virtulization technology. In this video, Cesar Alcacibar talks about the challenges in virtualization and how Huawei helps his company to achieve the best results possible. Alcacibar is expecting more adoption and integration of Huawei technologies in Chile.
LRTV Huawei Video Resource Center
Pro-Datech & Huawei for a High-Tech Singapore

10|14|14   |   2:59   |   (0) comments


Pro-Datech Systems is a specialty IT solution provider based in Singapore. For an added value to its customers, the company uses Huawei's hardware and trusted performance and features for a total solution. It's looking forward to the creation of a lab, to be based in Singapore, for the two companies' coorporation on total storage solution.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Forget the Internet, Brace for Skynet
Stephen Saunders, 10/15/2014
HBO Will Go OTT in 2015
Mari Silbey, Independent Technology Editor, 10/15/2014
Google: Carriers & Cloud Providers Need to Cooperate
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/16/2014
CBS Takes OTT Plunge
Mari Silbey, Independent Technology Editor, 10/16/2014
Could Data Be the New 'Currency'?
Ray Le Maistre, Editor-in-chief, 10/16/2014
Like Us on Facebook
Twitter Feed