Nokia’s stock fell about 7.4 percent this morning after the company reported first-quarter net revenue of €5.6 billion (US$6.4 billion).
This would have compared to net revenue of €6.1 billion ($6.9 billion) in the same quarter of 2015 “on a comparable combined company basis” if Alcatel-Lucent had been a part of Nokia during that time. Hence, total comparable revenue fell 9 percent.
In the company’s first earnings report since acquiring Alcatel-Lucent for €15.6 billion ($17.7 billion), Nokia reported a net loss of €513 million ($583 million) compared with a €177 million ($201 million) profit a year earlier as a standalone company.
“While our revenue decline was disappointing, the shortfall was largely driven by mobile networks, where the challenging environment is not a surprise,” Nokia CEO Rajeev Suri said on today’s earnings call.
Mobile networks sank about 15 percent during the quarter.
Suri had warned in the company’s fourth-quarter 2015 earnings call that he expected some market headwinds in 2016 in the wireless sector, and that the first quarter, in particular, looked challenging.
The remainder of 2016, Suri said, will be a period of transition. “This is particularly true for the first half of the year, where we do not expect the typically seasonal pattern of a weak Q1 followed by a stronger Q2.”
He said the integration of Alcatel-Lucent is progressing well. “We are now sufficiently confident in our progress that we are targeting synergies that are both more than and faster than our original plan.”
In April, Nokia began laying off some people in Finland as part of its promise to achieve around €900 million ($1.02 billion) in operating cost reductions by the end of 2018. In today’s call, Suri said the company has begun the process of reducing overlapping personnel, “including initial reductions in the United States and several other countries,” but he didn’t provide any numbers or time schedules.
Today, Nokia also announced it is purchasing the Internet of Things (IoT) company Withings for €170 million ($193 million). Withings offers digital health products and services and has about 200 employees. The cash transaction is expected to close in the third quarter, and Withings will become part of Nokia’s Technologies business.