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Roundup: Nokia's Q1 profitability plunges

Xinhua, April 30, 2015 Adjust font size:

Nokia's operating profit plunged in the first quarter of 2015, due to poor performance made by its network business, the company said Thursday.

According the company's interim report released on Thursday, its operating profit (non-IFRS) was 265 million euros (296 million U.S. dollars), 13 percent less than the same period of last year, while its net sales was 3.2 billion euros, up by 20 percent on year-on-year basis.

The fall in profitability was mainly attributed to the poor performance by Nokia Networks, the company's mainstay.

Nokia Networks' operating profit (Non-IFRS) decreased dramatically by 61 percent, from 216 million euros in the first quarter of 2014 to 85 million euros in the first quarter of 2015.

The Finnish business daily quoting an analyst said the profit drop was more probably because the profitability of the Nokia Networks reached the peak of a business cycle last year.

Meanwhile, Nokia's other sections, HERE and Nokia Technologies, performed quite well in operating profit, with 90 percent and 124 percent of growth respectively.

However, the significant results achieved by the mapping and patent licensing businesses could not offset the loss made by the network business.

Nokia's results were much lower than market expectations. Nokia's share price dropped as much as 12 percent in the Helsinki Stock Market on Thursday morning.

Nordea Bank's morning report said that the earning disappointment pushed Nokia's stock to a disastrous performance.

However, Nokia's CEO Rajeev Suri said he is confident of the company's future. "I remain confident that our lean operating model, ongoing focus on cost management, and the current strength of our portfolio will enable us to meet our 2015 goals for Nokia Networks," he said.

Two weeks ago, Nokia announced to acquire Alcatel-Lucent in a 15.6 billion euro deal. After the deal is finalized, the company is believed to become the second largest telecom manufacturer in the world next to the market leader Ericsson.

Nordea said the acquisition is the most strategically important business of the company.

Nokia, a global leader in communication technologies, used to be a dominator in the international mobile phone market. After the sale of its phone business to Microsoft, Nokia's operation divisions mainly include Nokia Networks, HERE and Nokia Technologies. (1 euro = 1.12 U.S. dollars) Enditem