Nokia sees fall in Q1 profits, gives cautious outlook

Nokia reported today a first- quarter net loss of 513 million euros (USD 584 million) due to lower demand in mobile networks as well as the impact of its acquisition of Alcatel-Lucent, and warned of a further decline in earnings.
In the company's first earnings report since the 15.6-billion-euro acquisition, Nokia said the loss compared with a profit of 177 million euros a year earlier.
Net sales were 5.5 billion euros, compared with the 2.9 billion euros it reported a year earlier. Combined net sales in the period in 2015 would have come in at 6.1 billion euros, Nokia said.

CEO Rajeev Suri described the revenue decline as disappointing and said the climate remained "challenging" in mobile networks. He warned of further cuts and layoffs as the company searched for savings with the merger. He did not give figures but said that layoffs had begun globally, including in the United States.
Nokia's share price fell 3 per cent to 4.87 euros in afternoon trading in Helsinki.
Hannu Rauhala, senior analyst at Pohjola Bank, said the result was much as expected.

"There was good and bad. Nokia's profitability was good and the gross margins were good, but the outlook was poorer than market expectations," Rauhala said. "The integration process with Alcatel is still ongoing and it's always difficult to predict how that is going to progress."

Sales in Nokia's main networks sector dropped 8 per cent in the period, mainly because of a 12 percent decline in Ultra Broadband Networks, Nokia said. Its networks operations in North America, which became its largest market with the acquisition of Alcatel-Lucent, fell by 17 per cent to 1.58 billion euros. Europe, its second biggest market, saw a decline of 3 percent to 1.2 billion euros. Only the small Latin American segment showed a slight improvement of 6 per cent.
The Finnish company's other sector, Nokia Technologies, which controls the company's huge portfolio of patents, saw sales fall 27 per cent from a year earlier to 198 million euros.

Suri said Nokia had earlier noted it expected some "market headwinds in 2016 in the wireless sector, and we continue to hold that view today.