Light Reading

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.
Flash Poll
From The Founder
Last week I dropped in on "Hotlanta," Georgia to moderate Light Reading's inaugural DroneComm conference – a unique colloquium investigating the potential for drone communications to disrupt the world's telecom ecosystem. As you will see, it was a day of exploration and epiphany...
LRTV Documentaries
Cable Eyeing SDN for Headend, Home Uses

5|26|15   |   05:57   |   (0) comments


CableLabs is looking at virtualizing CMTS and CCAP devices in the headend, as well as in-home devices, says CableLabs' Karthik Sundaresan.
LRTV Documentaries
Verizon's Emmons: SDN Key to Cost-Effective Scaling

5|22|15   |   03:53   |   (0) comments


For Verizon and other network operators to ramp up available bandwidth cost effectively, they need to move to SDN and agree on how to do that.
LRTV Documentaries
Lack of Universal SDN a Challenge

5|21|15   |   04:51   |   (3) comments


Heavy Reading Analyst Sterling Perrin talks about how uncertainty about SDN standards and approaches may be slowing deployment.
LRTV Custom TV
Steve Vogelsang Interview: Carrier SDN

5|20|15   |   05:02   |   (0) comments


Sterling Perrin speaks to Steve Vogelsang, Alcatel-Lucent CTO for IP Routing & Transport business, about the new Carrier SDN-enabling Network Services Platform and the operator challenges it solves.
LRTV Custom TV
Carrier SDN: On-Demand Networks for an On-Demand World

5|20|15   |   20:52   |   (0) comments


Steve Vogelsang, Alcatel-Lucent CTO for IP Routing & Transport business, talks about requirements and benefits of Carrier SDN during the keynote address at the Light Reading Carrier SDN event May 2015.
LRTV Documentaries
The Security Challenge of SDN

5|19|15   |   02:52   |   (0) comments


CenturyLink VP James Feger discusses concerns that virtualization could create new vulnerabilities unless network operators build in safeguards.
LRTV Custom TV
NFV Elasticity – Highly Available VNF Scale-Out Architectures for the Mobile Edge

5|18|15   |   5:50   |   (0) comments


Peter Marek and Paul Stevens from Advantech Networks and Communications Group talk about their NFV Elasticity initiative and the company's latest platforms for deploying virtual network functions at the edge of the network. Packetarium XL and the new Versatile Server Module: 'designed to reach parts of the network that other servers cannot reach.'
LRTV Huawei Video Resource Center
Bay Area Spark Meetup 2015

5|14|15   |   3:54   |   (0) comments


Developed in 2009, Apache Spark is a powerful open source processing engine built around speed, ease of use and sophisticated analytics. This spring, Huawei hosted a meetup for Spark developers and data scientists in Santa Clara, California. Light Reading spoke with organizers and attendees about Huawei's code contributions and long-term commitment to Spark.
LRTV Custom TV
The Transport SDN Buzz

5|12|15   |   06:01   |   (1) comment


Sterling Perrin, senior analyst at Heavy Reading, speaks with Peter Ashwood-Smith of Huawei and Guru Parulkar of ON.Lab about the evolution of transport SDN and the integration of technologies.
LRTV Custom TV
Next-Generation CCAP: Cisco cBR-8 Evolved CCAP

5|5|15   |   04:49   |   (0) comments


John Chapman, Cisco's CTO of Cable Access Business Unit and Cisco Fellow, explained the innovation design of Cisco's cBR-8, the industry's first Evolved CCAP, including DOCSIS 3.1 design from ground-up, distributed CCAP with Remote PHY and path to virtualization. Cisco's cBR-8 Evolved CCAP is the platform that will last through the transitions.
LRTV Custom TV
Meeting the Demands of Bandwidth & Service Group Growth

5|1|15   |   5:35   |   (0) comments


Jorge Salinger, Comcast's Vice President of Access Architecture, explains how DOCSIS 3.1 and multi-service CCAP can meet the demands of the bandwidth and service group growth.
LRTV Custom TV
DOCSIS 3.1: Transforming Cable From Hardware-Defined Network to Software-Defined Network

4|29|15   |   03:48   |   (0) comments


John Chapman, Cisco's CTO of Cable Access Business Unit and Cisco Fellow, explains how DOCSIS 3.1 can transform cable HFC network to a more agile software-defined network.
Upcoming Live Events
June 8, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, The Westin Peachtree Plaza, Atlanta, GA
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
All Upcoming Live Events
Infographics
Network functions virtualization (NFV) is not the easiest of topics to take on board, so here's a Light Reading infographic, developed following conversations with the folks at HP, that helps make sense of where NFV is taking the industry.
Hot Topics
10 Alternate Uses for Tablets
Eryn Leavens, Copy Desk Editor, 5/22/2015
Bidding War for TWC Looks Likelier
Alan Breznick, Cable/Video Practice Leader, 5/22/2015
Verizon Saves 60% Swapping Copper for Fiber
Sarah Thomas, Editorial Operations Director, 5/19/2015
Comcast Targets 6 New Gigabit Markets
Mari Silbey, Senior Editor, Cable/Video, 5/21/2015
Chattanooga Charts Killer Gigabit Apps
Mari Silbey, Senior Editor, Cable/Video, 5/20/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
With 200 customers in 60 countries, Stockholm-based Net Insight has carved out a solid leadership position in one of the hottest vertical markets going in comms right now: helping service providers and broadcasters deliver video and other multimedia traffic over IP networks. How has Net Insight managed to achieve this success in the face of immense competition from the industry giants?
My ongoing interview tour of the leading minds of the telecom industry recently took me to Richardson, Texas, where I met with Rod Naphan, CTO and SVP, Solutions, ...
I recently popped down to Texas to chat with CEO Eric L. Pratt about his company, Taqua.
Cats with Phones
Too Fluffy to Talk Click Here
Elmer found that his bountiful fur got in the way of meaningful conversation.