Nokia (NOK) Beats On Q3 Earnings, Networks Segment View Dull
Zacks Investment Research | Oct 25, 2017 10:40PM ET
Nokia (HE:NOKIA) Corporation’s (NYSE:NOK) third-quarter 2017 earnings (non-IFRS) per share of €0.09 (approximately 11 cents) surpassed the Zacks Consensus Estimate of 6 cents. In the year-ago period, the company had reported earnings of €0.04 (5 cents) per share.
Net sales declined year over year to €5.5 billion (approximately $6.5 billion). However, the top line surpassed the Zacks Consensus Estimate of $6.41 billion but fell short of the year-ago figure of approximately $6.57 billion. This was because revenues were hurt by the Nokia Networks’ disappointing performance. Weakness in the Ultra Broadband Networks’ subgroup contributed to the soft results posted by Nokia’s flagship division.
Quarterly adjusted gross margin was 42.7% in the reported quarter compared with 40% a year ago. Operating margin increased 280 basis points (bps) to 12.1% on a year-over-year basis. Markedly, strong performance in the Nokia Technologies division led to the upsurge.
Segmental Revenues
In the Nokia Networks segment, total revenue was approximately €4,823 million (around $5,667 million), down 9% year over year. The division includes three reportable sub-units - Ultra Broadband Networks (which includes Mobile Networks and Fixed Networks operations), Global Services and IP Networks and Applications (which includes the IP/Optical Networks and Applications & Analytics operations).
In fact, net sales declined in all regions, apart from Asia Pacific (2%) and Middle East and Africa (2%), which led to the segment’s below-par performance. The same decreased by 10% in Latin America, 16% in North America, 20% in Greater China and 7% in Europe.
However, segmental gross margin improved 110 bps to 38.6% in the reported quarter on the back of impressive operational discipline. Quarterly operating margin was 6.9% compared with 8.2% a year ago. Meanwhile, segmental operating margin was hurt by the below-par performance of the Ultra Broadband Networks sub-group.
Notably, the decline in the net sales of the Ultra Broadband Networks’ sub-group by 17% to €2,099 million (around $2,466 million) hurt sales of the Nokia Networks segment. Also, the Global Services sub-group registered a 2% decline in net sales to €1,359 million (around $1,597 million) primarily due to weakness in the communication service provider market. Net sales in the IP Networks and Applications sub-group declined 4% year over year to €1,365 million (around $1,604 million).
The Nokia Technologies segment’s quarterly total revenue was €483 million (approximately $567 million), up 37% year over year. Segmental gross margin was 97.9% compared with 96.6% in the year-ago quarter. Operating margin expanded significantly to 80.7%.
Segmental results were aided by Nokia’s licencing agreement with LG Electronics. We remind investors that Nokia had received an upfront cash payment from Apple (NASDAQ:AAPL) in the second quarter of 2017 following Nokia’s Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.