Adam Ewing Stockholm
NOKIA reported earnings topping analysts’ estimates as rising network spending by phone carriers in the US and China helped the Finnish equipment maker to its first quarter of sales growth since 2011. The stock jumped.
Third-quarter profit excluding some items rose to 9c a share from 6c a year earlier, it said yesterday. Sales increased 13 percent to e3.3 billion (R46bn).
Chief executive Rajeev Suri, who took over in May after Nokia sold its cellphone business to Microsoft for about $7.5bn, is boosting profit by focusing on more lucrative contracts. Nokia, vying with Ericsson and Huawei Technologies to supply base stations, antennas and related services, increased sales in North America 53 percent as carrier Sprint upgraded to faster networks.
“It’s overall robust, solid across the line,” said Per Lindberg, an analyst at ABG Sundal Collier. “Nokia is now regaining market share at a rapid clip.”
The adjusted operating margin at the network unit, which makes up about 90 percent of Nokia’s sales, expanded to 13.5 percent from 8.4 percent a year earlier. Revenue rose 13 percent, bolstered by a 38 percent rise in China and a 9 percent gain in Europe. Shares rose 5.45 percent to e6.86 at 1.07pm in Helsinki, giving Nokia a market value of e25.5bn.
Nokia raised its profitability forecast for the network division, saying its full-year operating profit will be above 11 percent. It projected the adjusted margin at or slightly above the high end of a target range of 5 percent to 10 percent.
This month it signed a $970 million (R11bn) contract with China Mobile to provide fourth-generation equipment, software and services through 2015. Third-quarter sales in North America benefited from Sprint rolling out a 4G network.
“We’ve initiated the Sprint project and that was part of the third-quarter bump,” Suri said. “Roll out will continue with our other customer T-Mobile.”
Nokia is betting on its two other businesses to boost margins and lift its debt rating from junk status. Its digital map business provides data to Amazon.com, Microsoft, Yahoo! and four out of five car-navigation systems. – Bloomberg