Nokia: No Enterprise Love

Nokia Corp. (NYSE: NOK) partly blamed delays in shipping its new e-Series smartphone for its poor showing in the enterprise market for the first quarter of 2006.

Nokia's sales for the enterprise solutions division were the lone disappointment in the Finnish vendor's otherwise robust first-quarter earnings report, which was released today.

The vendor reported that net sales for the unit fell 39 percent to €186 million (US$229 million), compared with €307 million ($379 million) in the first quarter of 2005. Net sales were down everywhere except China and North America.

Nokia's earnings report followed by two days that of Motorola Inc. (NYSE: MOT), which reported similarly soft results for its network equipment business. Network equipment sales for the quarter were $1.43 billion, down 14 percent compared with the same period last year for Motorola.

It is clear that Nokia has a lot riding on the e-Series in the enterprise space. The shipping situation is unlikely to improve over the next quarter either.

"The Nokia e-Series products are not expected to reach big volumes until the third quarter," says Nokia CFO Rick Simonson.

The enterprise results are in marked contrast to the rest of Nokia's first quarter, particularly in overall handset sales. The The company shipped 75.1 million mobile phones during the quarter, up 40 percent on last year. Total net sales rose 29 percent over 2005 to €9.51 billion.

Here's how Nokia's results break down:

Table 1: Nokia's first quarter by division
EUR million Q1/2006* Q1/2005** Change (%)
Net sales 9 507 7 396 29
Mobile Phones 5 869 4 527 30
Multimedia 1 758 1 133 55
Enterprise Solutions 186 307 -39
Networks 1 699 1 431 19
Operating profit 1 367 1 118 22
Mobile Phones 1 085 869 25
Multimedia 323 155 108
Enterprise Solutions -66 -9
Networks 149 221 -33
Common Group Expenses -124 -118
Operating margin (%) 14.4 15.1
Mobile Phones (%) 18.5 19.2
Multimedia (%) 18.4 13.7
Enterprise Solutions (%) -35.5 -2.9
Networks (%) 8.8 15.4
Net profit 1 048 863 21
Basic 0.25 0.19 32
Diluted 0.25 0.19

— Dan Jones, Site Editor, Unstrung

Star Man 12/5/2012 | 3:56:27 AM
re: Nokia: No Enterprise Love The problem is Symbian sucks.

The market is huge but their E-handsets suck and Nokia has zero understanding of how to market into the enterprise market space.
daniel.taylor 12/5/2012 | 3:56:36 AM
re: Nokia: No Enterprise Love I don't blame Nokia for the market structure, but what's the business model for the enterprise mobility market? Nokia's got a 33% gross margin on handsets, and it looks like there will be better margins at the low end than the high-end enterprise devices like the E-series.

Meanwhile, RIM's making a 60% gross margins on BlackBerry. And everyone is giving away mobile e-mail software.

Without a software business, there's not much room for resellers. And so we go back to a vicious cycle where everyone relies on the wireless operators as the primary distribution channel.
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