Nokia is starting to see some momentum from its turnaround strategy. During the company’s first quarter 2017 earnings call with investors, CEO Rajeev Suri praised the company’s performance during what he called “a typically seasonally weak quarter.”
The Finnish infrastructure vendor reported a net loss of $515 million for the first quarter, which is an improvement from a net loss of $677.7 million in the first quarter of last year. Overall sales declined slightly from $5.98 billion to $5.87 billion in the first quarter of the previous year.
Nokia’s networks business, which accounts for the majority of the company’s sales, fell 6 percent year-on-year to $5.3 billion but the technologies division saw its sales rise 25 percent thanks to some patent and brand licensing.
“We saw encouraging signs of stabilization in mobile networks,” Suri said on the call. “I’m pleased but not fully satisfied.”
Suri may not be fully satisfied, but investors reacted favorably to the company’s quarterly results. At mid-day the company’s stock was trading up 6 percent to $5.69 per share.
Of course, much of the slowing decline of Nokia’s losses are due to the company’s integration of Alcatel Lucent and the efforts to cross-sell equipment between the two companies’ customer bases. Suri said this occurred in Asia-Pacific and India where Nokia has been selling customers Alcatel-Lucent’s IP product portfolio.
He reiterated the company’s strategy moving forward, noting that it’s going to focus on delivering high performance networks to service providers; expanding its sales to vertical markets like energy, transportation, and webscale companies; creating a standalone software business; and building its consumer business.
He noted the company is seeing renewed momentum from mobile operators and strong interest in the company’s path to 5G products. Suri said Nokia has 145 customer deals for its 4.5G product line, which is up from 110 at the end of 2016.
Suri also hinted that the company is planning a major product announcement in June –an IP product that he said will give Nokia a strong competitive position with webscale and service provider customers. The company expects orders for this product to occur in the fourth quarter and revenue from the product to be realized in early 2018.
Standalone Software Biz
Last November, Nokia announced its plans to create a standalone software business, and Suri updated investors on this plan, noting that the company is building segment specific sales teams. He also hinted that the company may be making more acquisitions in this area to fill gaps in the software portfolio.
The company’s $370 million acquisition of operational support services (OSS) specialist Comptel, announced February 1, was intended to help Nokia build the right software portfolio so customers can automate their network and business operations including customer services, self-optimization, management, and orchestration.