Nokia Siemens Shrinks in Q3

Nokia Siemens sees its third-quarter revenues shrink year-on-year as exchange rate changes hit the vendor's top line

October 16, 2008

3 Min Read
Nokia Siemens Shrinks in Q3

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%





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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