& cplSiteName &

Has NSN Turned a Corner?

Ray Le Maistre
1/24/2013
50%
50%

Could this be the start of a turnaround at Nokia Siemens Networks? The network systems vendor reported improved sequential and year-on-year sales and margins during the final quarter of 2012, generating revenues of €3.99 billion (US$5.36 billion) -- up 5 percent compared with a year ago and up 14 percent compared with the third quarter -- and posting a gross margin of 36 percent (better than the 29.2 percent of a year ago and the 32.2 percent achieved in the previous quarter). The numbers were reported as part of parent company Nokia Corp.'s earnings report. (See Nokia Makes €2.03B Full-Year Operating Loss.) The numbers aren't unexpected: Nokia pre-announced the improving situation on Jan. 10. (See Nokia: Q4 Not as Bad as Expected.) The improved sales are the result of strong traction with mobile operators (for network systems as well as professional services) and the margins have been helped by the lower cost base that is the result of the company's ongoing restructuring program -- NSN ended 2012 with 58,400 staff, a reduction of 15,300 compared with the end of 2011 -- though the vendor says its mix of sales was more weighted generally towards higher-margin infrastructure and services products. The vendor had a particularly encouraging quarter in North America, where revenues of €426 million ($570 million) were up by 45 percent compared with a year earlier and up 49 percent sequentially. NSN's strongest region for sales is Asia/Pacific (not including China), where it generated revenues of nearly €1.18 billion ($1.59 billion), up 29 percent compared with a year ago, but down 7 percent compared with the third quarter of 2012. The improvement in sales and gross margins, plus a decreasing cost base, helped the company to report an operating margin (after one-time costs) of 14.4 percent, a dramatic improvement compared with the 4.6 percent achieved a year earlier. The company's cost base looks set to decrease further during 2013 as it has agreed the sale of its optical and BSS business units, which will result in lower general operating expenses as staff transfer to their new employers, though these divestments will also impact revenues to some extent. For the full year 2012, NSN reported revenues of €13.78 billion ($18.43 million), down 2 percent compared with 2011, and an operating margin (after one-time costs) of 5.6 percent compared with 1.6 percent for 2011. With a following wind, NSN is now working towards consistent positive operating margins. Nokia noted in today's earnings release that NSN is "focused on maintaining a strong financial position and liquidity profile. Cash generation is a clear priority at Nokia Siemens Networks, and the company intends to be self-funding in all aspects of its operations." There's clearly improved optimism within the company, as it's expected to seek fresh capital from the bond market, something it could not have reasonably contemplated a year ago. (See Euronews: NSN Looks to Raise €700M.) It's clear, though, that while its performance has improved, the company is still not out of the woods. The company expects that, after one-time costs, its operating margin in the first quarter of 2013 will be somewhere around 3 percent, though it notes that this could vary by four percentage points either way. That's clearly a major dip from the fourth quarter and clearly signals that the company could yet report an operating loss even after restructuring costs. But the first quarter is normally a tough one for all vendors: Quite how well NSN is doing, and whether it has real momentum, can only reasonably be judged after another few quarters of results. For now, though, there are certainly signs that the vendor moving in the right direction. — Ray Le Maistre, International Managing Editor, Light Reading

(3)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
fjanisze
50%
50%
fjanisze,
User Rank: Light Beer
2/5/2013 | 5:44:47 PM
re: Has NSN Turned a Corner?
This is just the beginning, the situation is going to be improved in the next months.. At least, that is what i hope.
Craig Matsumoto
50%
50%
Craig Matsumoto,
User Rank: Light Sabre
1/24/2013 | 6:27:17 PM
re: Has NSN Turned a Corner?
Nice news for NSN, but I still wonder what Marlin can build out of it.
Ray Le Maistre
50%
50%
Ray Le Maistre,
User Rank: Light Sabre
1/24/2013 | 5:52:57 PM
re: Has NSN Turned a Corner?
I think we'll get a clearer picture of NSN's ongoing performance after H1 2013 -- if it's still outperforming year-on-year and holding on to gross margins in the 30s then it will have at least bought itself some time and have something to build further upon. It certainly looks like its mobile broadband + professional services + Customer Experience Management (CEM) applications focus was the right one for the company.
From The Founder
Light Reading sits down at CES with the head of Cisco's service provider video business, Conrad Clemson, to discuss how NFV and cloud security relate to video, the challenge of managing 4K/8K traffic, the global expansion of Netflix and virtual reality.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Documentaries
All Change in Video

2|11|16   |   33:12   |   (1) comment


At this moderated panel at 2020 Vision in Dublin, Alan Breznick, Cable/Video Practice Leader of Light Reading, sits down with Jeff Finkelstein, director of network architecture at Cox Communications, to discuss the rapidly changing video market.
LRTV Custom TV
Hosting in Ireland, Past & Present

2|10|16   |   16:07   |   (0) comments


Garry Connolly, president of Host in Ireland, presents the keynote at Light Reading's 2020 Vision Executive Summit in Dublin.
Women in Comms Introduction Videos
What's Hot in Mobile Commerce?

2|10|16   |   12:18   |   (1) comment


Claire Maslen, financial services relationship manager at the GSMA, talks about the development of the digital commerce sector and the types of relationships that mobile operators are developing to further their m-commerce strategies.
LRTV Documentaries
EANTC Tests Nokia IP Routing & Mobile Gateway VNFs for Real World Deployment

2|9|16   |   5:08   |   (1) comment


Nokia obtained validation of its virtualized router and virtualized mobile gateway capabilities through rigorous testing performed by EANTC. The results set a new industry benchmark for outstanding performance, scalability, resiliency and manageability. Nokia VNFs are ready for telco cloud deployment, so that service providers can accelerate mobile, business and ...
Between the CEOs
CEO Chat With Level 3's Jack Waters

2|8|16   |   26:15   |   (1) comment


Light Reading CEO and founder Steve Saunders sits down with Level 3 Communications' CTO Jack Waters to discuss hot topics like virtualization, 4K and the future of telecom...
LRTV Custom TV
The Composable Telco

2|8|16   |   24:46   |   (0) comments


Heavy Reading's Principal Analyst Caroline Chappell presents the keynote at Light Reading's 2020 Vision Executive Summit in Dublin.
LRTV Custom TV
Join Us at the Digital Operations Transformation Summit

2|4|16   |   03:52   |   (0) comments


The Digital Operations Transformation Summit on February 21, 2016 at the Crowne Plaza Barcelona Fira Centre will bring together 50 senior executives to engage in a unique debate on the opportunities and challenges presented by the transformative evolving digital landscape. RSVP now at events@lightreading.com.
LRTV Custom TV
Making the Test: ADVA Ensemble Connector vs. Open vSwitch

2|4|16   |   01:28   |   (0) comments


Light Reading, in partnership with EANTC, recently tested ADVA's Ensemble Connector, which replaces open vSwitch and offers carrier-grade capability and interoperability. The test results strengthen ADVA's credibility as a provider in the virtualization space.
LRTV Custom TV
Bridging the Gap Between PoCs & Deployment in NFV

2|4|16   |   31:50   |   (0) comments


Charlie Ashton of Wind River presents the keynote at Light Reading's 2020 Vision executive summit in Dublin.
Between the CEOs
CEO Chat With Mike Aquino

2|3|16   |   17:34   |   (0) comments


The former CEO of Overture Networks, Mike Aquino, discusses why truly open virtualization solutions provide service providers with the greatest choice.
Shades of Ray
MWC: Buckle Up for 5G & the IIoT

2|2|16   |   02:28   |   (0) comments


This year's Mobile World Congress looks set to be a 5G land grab and a chance to get down and dirty with the Industrial Internet of Things (IIoT) – but what will the 5G discussions actually be about?
LRTV Custom TV
Case Study: Building China's Next-Gen TV Networks

2|2|16   |   5:01   |   (0) comments


With over 2 billion viewers worldwide, Shenzhen Media Group is one of China's largest content producers. By partnering with Huawei and Sobey, SZMG was able to modernize media operations with the Converged News Center, a production studio that is a model for next-generation workflows.
Upcoming Live Events
March 10, 2016, The Cable Center, Denver, CO
April 5, 2016, The Ritz Carlton, Charlotte, NC
May 23, 2016, Austin, TX
May 24-25, 2016, Austin Convention Center, Austin, TX
All Upcoming Live Events
Hot Topics
AT&T Lights Fire Under 5G, Plans 2016 Trials
Iain Morris, News Editor, 2/12/2016
Yahoo & Verizon Sitting in a Tree...
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 2/8/2016
Vodafone: Flexible Work Policies Boost Profits
Sarah Thomas, Editorial Operations Director, 2/8/2016
It's Time to Integrate OTT Video
Alan Breznick, Cable/Video Practice Leader, 2/8/2016
Andreessen Facepalms on Facebook Free Basics
Mitch Wagner, West Coast Bureau Chief, Light Reading, 2/10/2016
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO and founder Steve Saunders sits down with Level 3 Communications' CTO Jack Waters to discuss hot topics like virtualization, 4K and the future of telecom...
The former CEO of Overture Networks, Mike Aquino, discusses why truly open virtualization solutions provide service providers with the greatest choice.
Live Digital Audio

Broadband speeds are ramping up across Europe as the continent, at its own pace, follows North America towards a gigabit society. But there are many steps to take on the road to gigabit broadband availability and a number of technology options that can meet the various requirements of Europe’s high-speed fixed broadband network operators. During this radio show we will look at some of the catalysts for broadband network investments and examine the menu of technology options on offer, including vectoring and G.fast for copper plant evolution and the various deployment possibilities for FTTH/B.