Nokia stumbled into 2018 with first quarter results coming in below what it posted last year. However, the vendor cited recent geo-political issues encompassing China-based rivals Huawei and ZTE and increased 5G competition among North American operators, pointing to better fortunes going forward.
Speaking to reporters after the release of its latest results, Nokia CEO Rajeev Suri touched on current issues impacting some of its rivals, noting that “longer term, there might be opportunities.”
“Trust and security is a big part of our brand and an integral part of our portfolio,” Suri said, according to reports.
Huawei and ZTE are both embroiled in U.S. government investigations tied to violating trade sanctions on the sale of equipment to Iran. The vendors are also being squeezed out of working with U.S. operators due to concerns over potential ties to the Chinese government.
Suri also cited strong interest in Nokia gear from U.S. operators looking to deploy 5G networks later this year. The vendor has struck a deal with T-Mobile US, and it has been working on various trials with AT&T.
Nokia has also signed 5G deals with a number of international operators, including China Mobile, NTT DoCoMo, Orange, Vodafone, Korea Telecom, SK Telecom, and Telefonica. During the recent Mobile World Congress event, Suri said the U.S. and China were leading the race to 5G deployments.
Slow out of the Gate
For its most recent quarter, Nokia reported $6 billion in net sales, which was an 8 percent year-over-year drop and just short of analyst forecasts. The sales dip was spread across most of Nokia’s operating divisions, with the most impactful hit coming from its networks division that accounts for the vast majority of its business.
Network division sales were down 12 percent year-over-year to $5.2 billion. But operating profits plunged a more dramatic 87 percent to $52 million.
Nokia’s management blamed the network spending shortfall on typical Q1 softness and operators keeping their powder dry until an expected burst later this year in spending tied to 5G networks.
“We expect an atypical seasonal trend with softness in the first half of the year, offset by a very dynamic second half,” Suri said during a conference call.
The spending hit trickled down to its bottom line with net income plunging 56 percent to $104.1 million.
Suri’s warm tones of optimism about where Nokia was headed soothed investors. Nokia’s stock was trading basically flat early Thursday at around $5.93 per share.
Photo copyright: comzeal / 123RF Stock Photo