Ethernet equipment

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%
Source: Nokia Corp.

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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