Nokia beats rival Ericsson in Q3 earnings report

Nokia beats analyst predictions and avoids the disastrous Ericsson third-quarter

Nokia

Nokia has today reported a decline in third-quarter revenue and profits for its network gear business, but managed to mitigate some damage thanks to its recent takeover of rival Alcatel-Lucent.

Total third-quarter profits of 556 million, an 18% drop compared to this time last year, but better than the 430 million anticipated by analysts, helped in part by the Alcatel-Lucent acquisition in April, which boosted revenue through a one-off licensing payment.

Overall revenue fell 7% to 5.95 billion year-on-year, while sales for networking equipment dropped 12% to 5.32 billion slightly below market estimates of 5.39 billion.

Despite the drop in sales, Nokia still managed to outperform its biggest rival, Ericsson, which reported a staggering 93% drop in quarterly operating profit for its network business earlier this month. The near disastrous Q3 has caused concern among investors, as the Swedish company struggles to cope with slow demand in the network market and tough competition.

Nokia has so far been able to ease the pressure on its networking business through a number of cost cutting measures, including the loss of thousands of jobs worldwide, as it plans to save almost 1.2 billion by 2018.

"We were able to deliver solid results despite market conditions that are softer than expected, particularly in mobile infrastructure," said Nokia CEO Rajeev Suri, in a statement. "We expect those conditions to stabilise somewhat in 2017, with the primary addressable market in which Nokia competes likely to decline in the low single digits for that year."

"I believe that we will meet our guidance for our Network business of significant sequential sales and operating margin increase for Q4, and our full-year operating margin guidance of 7% to 9%," added Suri.

The value of Nokia shares fell 6.1% to 4.40 on Thursday, dropping almost 33% this year, compared to a 46% drop by Ericsson.

Speaking to Reuters, Inderes Equity Research analyst Mikael Rautanen, said: "Nokia was able to achieve surprisingly good margins in the networks business. It's a defensive win for Nokia, after the market was spooked by Ericsson."

"The trend for declining sales is similar for both companies, but Nokia has been better prepared for slowing demand by continuously improving its efficiency," added Rautanen.

Network equipment providers have struggled with slowing growth, as wireless carriers in principle markets such as the US have curbed spending on current infrastructure, as they await a fresh cycle of upgrades in 2020.

Featured Resources

The ultimate law enforcement agency guide to going mobile

Best practices for implementing a mobile device program

Free download

The business value of Red Hat OpenShift

Platform cost savings, ROI, and the challenges and opportunities of Red Hat OpenShift

Free download

Managing security and risk across the IT supply chain: A practical approach

Best practices for IT supply chain security

Free download

Digital remote monitoring and dispatch services’ impact on edge computing and data centres

Seven trends redefining remote monitoring and field service dispatch service requirements

Free download

Recommended

Nokia subsidiary reveals data breach following Conti ransomware raid
Mobile Phones

Nokia subsidiary reveals data breach following Conti ransomware raid

24 Aug 2021
Nokia 5.4 review: Behind the curve
Mobile Phones

Nokia 5.4 review: Behind the curve

15 Jun 2021
Nokia unveils the world’s first telecom AI library
artificial intelligence (AI)

Nokia unveils the world’s first telecom AI library

26 May 2021
Nokia's Digital Automation Cloud will power WEG's Industry 4.0 project
automation

Nokia's Digital Automation Cloud will power WEG's Industry 4.0 project

26 Apr 2021

Most Popular

Best Linux distros 2021
operating systems

Best Linux distros 2021

11 Oct 2021
Apple MacBook Pro 15in vs Dell XPS 15: Clash of the titans
Laptops

Apple MacBook Pro 15in vs Dell XPS 15: Clash of the titans

11 Oct 2021
Windows 11 has problems with Oracle VirtualBox
Microsoft Windows

Windows 11 has problems with Oracle VirtualBox

5 Oct 2021