Stockholm - Nokia reported a narrower loss than analysts estimated yesterday as job cuts and site closures helped offset waning sales at the network equipment division and the mobile device unit being sold to Microsoft.
The third-quarter net loss narrowed to e91 million (R1 billion) from e959m a year earlier, Finland-based Nokia said. Analysts had projected e171.5m on average. Sales fell 22 percent to e5.66bn, compared with the average estimate of e5.87bn.
Nokia, which will focus on wireless network equipment after the handset division sale to Microsoft, is struggling to boost revenue as carriers curb spending and larger rivals Ericsson and Huawei Technologies snap up contracts. Nokia cut more than 21 000 jobs at the networks business, which it fully took over from Siemens during the quarter, and sold other assets to revive profitability.
Sales at the network division declined 26 percent to e2.59bn compared with e2.73bn estimated by Sami Sarkamies, an analyst at Nordea Bank in Helsinki. The unit’s operating profit, excluding some items, was e218m, compared with the e240m estimated by Sarkamies.
In the current quarter, adjusted operating profit at the network unit would be 12 percent of sales, plus or minus 4 percentage points, Nokia forecast. Sarkamies estimated about 10 percent.
The shares rose 5.4 percent to e5.27 by 1.07pm in Helsinki yesterday. The stock had added 71 percent this year through Monday, boosted by the Microsoft deal announced on September 2. Microsoft has gained 33 percent this year.
Because the handset division would cease to be part of Nokia, the unit’s performance had little effect on its share price, Sarkamies said. Nokia’s value was mainly tied to the network division as well as what it decided to do with its cash, he said.
Nokia will make more than 90 percent of its revenue from its network equipment business after the completion of the $7.2bn (R70.6bn) deal with Microsoft, which is expected to be effective in the first quarter of next year. The network division, whose customers are wireless carriers such as Vodafone, sells antennas and base stations that transmit calls and allow cellphone and tablet users to surf the internet. Nokia competes with Ericsson and Huawei for service contracts.
Ericsson, the largest maker of wireless networks, said a year ago that it would cut 1 550 jobs in Sweden to make up for weak demand and last week it reported a 2.9 percent drop in third-quarter sales.
This month, Nokia introduced its first tablet and two smartphones with six-inch displays. The products will help Microsoft expand the Windows mobile device line-up to better challenge Apple and Samsung Electronics’s dominance of the tablet and smartphone markets. Samsung and Apple combined sold more than 120 million smartphones last quarter. – Bloomberg