Nokia might have wobbled a bit last year, but the equipment and software vendor managed to end 2017 on an operational high note.
For the fourth quarter, Nokia reported that total revenues dipped 1 percent to $8.3 billion compared to the same quarter in 2016. Revenue declines were spread across most of its operating units with only its technologies division posting a year-over-year gain. Nokia’s technologies division is focused on “advanced technologies” and licensing.
For the full year, revenues were down 3 percent to $29 billion compared with fiscal 2016. Blame for the drop was spread to its quarterly results across most of its operating units.
Despite the dip in revenues, profits increased 6 percent for Q4 to $894 million, and a robust 50 percent for the year to $1.56 billion. The full-year results were also slightly better than the 3 percent to 5 percent dip the company had forecast following the company’s Q2 results.
The full-year results, plus some positive comments from Nokia CEO Rajeev Suri, bolstered investor sentiment. The company’s stock was trading up more that 13 percent in early Thursday trading at $5.44 per share. The broader New York Stock Exchange was trading up less than 1 percent.
The latest numbers were also a nice rebound from Nokia’s Q3 numbers when operational challenges at its largest business units – network and ultra broadband – sunk its bottom line.
N.A., 5G Point to Rosier Future
Unlike dour post-Q3 comments on the company’s network business, Suri had a more positive spin on future expectations post-Q4. He explained that the company now expects a slower rate of decline for 2018, citing “improved conditions in North America.”
He had previously stated that Nokia’s network business would see between a 2 percent and 5 percent drop in revenues for 2018. Suri cited ongoing technology transitions; increased competitive pressure from Chinese vendors; and potential consolidation among its operator customers, which he said was mostly a North America issue.
The cited improved conditions are expected to gain momentum with 5G network deployments beginning later this year. Nokia earlier this week launched a new chipset architecture that will power its Future X for 5G. Future X encompasses all of Nokia’s work around 5G platforms, which Suri said integrates well with the end-to-end portfolio needed for 5G networks.
Nokia’s results come on the heels of Nordic rival Ericsson struggling to find its operational footing.
Ericsson this week reported a Q4 net loss of $2.4 billion compared to a net loss of $203 million in the same quarter the previous year. Revenue was $7.2 billion, down from $8.3 billion in the same quarter last year. Ericsson pinned the shortfall on lower spending by Chinese wireless operators and increased competition from Chinese vendor Huawei.
Similar to Nokia, Ericsson executives said that the company is seeing an increase in traction with 5G, noting that wireless operators are starting to engage in discussions. They also said the company was seeing positive momentum in North America.