NSN Maintains Momentum
Nokia Siemens Networks is maintaining its financial momentum as it works its way towards becoming an independent company.
That might sound strange, given that it has just reported first quarter 2013 revenues of €2.8 billion (US$3.66 billion), down 5 percent from a year ago and down 30 percent from the fourth quarter of 2012.
But NSN has been selling its non-core assets and is now a smaller company than it was a year ago, so that accounts for much of the year-on-year dip in sales. (See Redknee Seals NSN Deal.)
Seasonal shifts and the fact that it had a blowout fourth quarter to finish 2012 go some way to explaining the sequential dip in revenues. (See Has NSN Turned a Corner?)
What's important to note, though, is that it’s a more stable operation. In the first quarter of this year NSN broke even at an operating level -- OK, so it reported a tiny operating profit of €3 million ($3.9 million) to be exact. That's a great improvement compared with the €1 billion ($1.3 billion) operating loss of a year ago.
Its gross margin rate (after one-time costs) also shows its improving financial health, reaching 34 percent for the first three months of 2013 compared with 26.6 percent a year earlier. (For more details see this Nokia press release.)
If NSN can show some consistent growth in revenues through this year and maintain a positive operating margin, its current joint owners might cut it loose to fend for itself. (See NSN Opens Up (a Little).)
The key to that growth, it seems, is maintaining its position in the LTE equipment market: The vendor says it has been boosting its mobile broadband sales as a result of 4G contracts.
There's a lot more 4G-related business to be won in 2013 and beyond and if NSN can grab a decent slice of that action, CEO Rajeev Suri might be proven correct about his company's prospects. (See NSN: This RAN Ain't Big Enough for All of Us and NSN CEO: Don't Write Our Obituary.)
— Ray Le Maistre, Editor-in-Chief, Light Reading