Nokia says quarterly profit rose but cautions on outlook (Update)

February 11, 2016 byMatti Huuhtanen

Nokia Corp. saw fourth-quarter profit grow more than 50 percent to 498 million euros ($560 million) on a slight increase in sales, but the telecom networks company cautioned it would face some "market headwinds," especially in China.

The pared-down Finnish company, which sold off HERE mapping services in November after selling its handsets division, said it can expect a challenging first quarter as the company prepares to establish itself as a leading global networks provider on the completion of its 15.6 billion-euro acquisition of ailing French company Alcatel-Lucent.

Analysts said the results were much as expected, although some markets had brought disappointments, pushing Nokia's share price to close down 2 percent at 5.22 euros on the Helsinki Stock Exchange.

"Nokia is struggling to wrap up the Alcatel deal and the market for networks is pretty tough globally, so no major surprises there," said Neil Mawston from Strategy Analytics near London. "This year will probably be pretty much the same as 2015, with some markets see-sawing from quarter to quarter."

Revenue grew 3 percent for continuing operations in the period, to 3.6 billion euros, with strong growth in the technologies sector.

Nokia said it booked a gain of $2.5 billion euros from the sale of its mapping services to leading auto companies, Audi, BMW and Daimler, completed in December and reported it as discontinued operations. CEO Rajeev Suri said the company was on track to compete the acquisition of Alcatel-Lucent with 91 percent of its share capital.

Describing 2015 as "another dramatic year of transformation," Suri said he was pleased to close the year with "solid performances" from both remaining units—networks and technologies.

Networks, which accounts for 90 percent of total sales, grew 5 percent year-on-year to 3.2 billion euros in the quarter, while the technology unit, which controls the company's vast portfolio of patents, saw sales jump 170 percent in the quarter to 403 million euros.

"While the competitive environment in networks remained generally stable in the fourth quarter, we do expect some market headwinds in 2016 as 4G/LTE rollouts in China and some other markets start to slow," Suri said. "The first quarter, in particular, looks quite challenging."

Buoyed by arbitration, mainly from Samsung, Nokia says it expects to receive at least 1.3 billion euros of cash during the next three years from settled and ongoing arbitrations. Although the company would have liked to see a better result from the Samsung arbitration, Suri said they will continue to discuss with Samsung about other intellectual property rights not covered by the arbitration.

He said that arbitration continues with another company, but gave no details, and said that licensing talks are continuing also with other companies.

"I remain confident that our intellectual property portfolio is second to none in the industry," Suri told analysts during a conference call.

In the full-year, Nokia's overall sales from continuing operations grew 6 percent to 12.5 billion euros, while net profit fell by more than half to 1.2 billion euros.

Explore further: Nokia turnaround since handset unit sale continues (Update)

Related Stories

Nokia turns to fourth quarter profit buoyed by strong growth

January 29, 2015

Nokia made a net profit of 443 million euros ($502 million) in the fourth quarter and sales grew nearly 10 percent, but its share price fell Thursday as the results were offset by a poor performance in some regions, higher ...

Nokia turns to Q1 profit but networks division is a concern

April 30, 2015

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 10 percent Thursday over a weak performance at ...

Nokia shareholders give green light to Alcatel acquisition

December 2, 2015

Nokia shareholders have overwhelmingly approved the acquisition of ailing French telecom Alcatel-Lucent, removing one of the last hurdles to the 15.6 billion euro deal that will make the Finnish company a market leader in ...

Nokia to close HERE mapping deal with German automakers

December 3, 2015

Nokia says it has received all regulatory approvals for the 2.8 billion euro ($3.1 billion) sale of its mapping unit to a consortium of German carmakers, Audi AG, BMW Group and Daimler AG, and expects to close it ahead of ...

Recommended for you

Where can I buy a chair like that? This app will tell you

August 23, 2016

If you think you have a knack for interior design, or just want to spruce up your own home, new technology developed by Cornell researchers may help you choose furnishings the way professionals do. And professionals may find ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.