Nokia makes Q1 net profit of 177 million euros

PanARMENIAN.Net - Buoyed by strong overall sales, Nokia made a net profit of 177 million euros ($195 million) in the first quarter from a loss a year earlier, but its shares plummeted more than 9 percent Thursday, April 30, over a weak performance at its main networks unit, the Associated Press reports.

Despite a rise in sales in all its operations for the third quarter in a row, Nokia CEO Rajeev Suri described the networks division's profits — which fell 60 percent — as "unsatisfactory," saying the company was hurt by increased competition and "strategic entry deals, particularly in China."

Investors were disappointed, pushing Nokia stock down more than 9 percent to 6.14 euros in early Helsinki trading.

Analyst Hannu Rauhala from Pohjola Bank described Nokia's networks profit as "a clear disappointment."

The Finnish company's overall revenue surged 20 percent in the period, to 3.2 billion euros from 2.6 billion euros a year earlier. Net loss in the first quarter of 2014 was 239 million euros.

The former top mobile phone maker, which peaked in 2008 with a global market share of 40 percent, failed to meet the smartphone challenge of the iPhone, Samsung and cheaper competitors in Asia. But its fortunes changed when it sold the ailing cellphone unit to Microsoft last year and started showing growth in the three remaining operations — networks, mapping services and technologies.

The technologies section doubled sales to 193 million in the quarter, while HERE mapping services grew 25 percent to 261 million euros. Networks, which accounts for more than 80 percent of revenue, grew 15 percent to 2.6 billion euros. The company said it expects growth to continue in all three sectors.

Earlier this month, Nokia announced a major deal to acquire French networks company, Alcatel-Lucent, which could make it the leading global networks provider. Suri described it as a "good deal" with benefits to shareholders.

"We are moving fast on the necessary integration planning, and have already established a structure designed to minimize disruption to our ongoing business," Suri said.

Nokia says it expects savings of 900 million euros by 2019 when the two companies join, with 200 million euros reductions in interest expenses per year by 2017.