Nokia Siemens sees its third-quarter revenues shrink year-on-year as exchange rate changes hit the vendor's top line
October 16, 2008
Nokia Networks (NSN) has reported revenues of €3.5 billion (US$4.76 billion) for its third quarter, nearly 5 percent lower than the same period in 2007 and nearly 14 percent down from its second-quarter sales.
The vendor noted, though, that the year-on-year comparison has been hit hard by currency exchange rate differences, and that at a constant $/€ exchange rate its third-quarter revenues would have been about the same as last year's €3.67 billion ($4.95 billion).
The equipment firm's financials were released as part of parent Nokia Corp. (NYSE: NOK)'s earnings announcement: Nokia reported revenues of €12.24 billion ($16.53 billion), below analyst expectations. Nokia's share price fell nearly 2.5 percent to €11.50 on the Helsinki exchange.
The European and Chinese markets were the main contributors to NSN's sales dip. Revenues in Europe fell 9.5 percent year-on-year to €1.36 billion ($1.84 billion), while revenues from China fell 22.6 percent to €288 million ($389 million).
The drop in Chinese sales can be attributed to the capex squeeze caused by the country's telecom reorganization and the halt of major work during the Olympic Games: Those factors are expected to hurt the third-quarter sales of a number of major international vendors. (See China Begins $70B Carrier Revamp.)
NSN did, though, see a year-on-year increase in revenues from the Asia/Pacific (without China) and Latin America markets, at 5.3 percent and 10.2 percent respectively. (See table below.)
Table 1: Nokia Siemens Revenues by Region (in � millions)
Q3 2008 | Q3 2007 | Y/Y change | Q2 2008 | Q/Q change | |
Europe | 1,358 | 1,500 | -9.5% | 1,412 | -3.8% |
Middle East and Africa | 424 | 448 | -5.4% | 553 | -23.3% |
Greater China | 288 | 372 | -22.6% | 413 | -30.3% |
Asia/Pacific | 894 | 849 | +5.3% | 1,076 | -16.9% |
North America | 150 | 152 | -1.3% | 158 | -5.1% |
Latin America | 389 | 353 | +10.2% | 455 | -14.5% |
Total | 3,503 | 3,674 | -4.7% | 4,067 | -13.9% |
Source: Nokia Corp. |
NSN's gross margin rose to 30.8 percent from 28.3 percent a year ago, and reported an operating loss (including one-time charges and special items) of just €1 million ($1.35 million), compared with a loss of €120 million ($162 million) in the third quarter of 2007.
Excluding one-time charges and special items, NSN reported an operating profit of €177 million ($239 million), up from the €110 million ($149 million) reported a year earlier.
— Ray Le Maistre, International News Editor, Light Reading
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