By Juhana Rossi
HELSINKI--Finland's Nokia Corp. reported better-than-expected
fourth-quarter net profit and fattened its dividend but some
investors took fright at a fall in revenue from the licensing of
its large catalog of patents.
Nokia's shares fell sharply in Helsinki as investors latched on
to a decline in licensing revenue from the previous three months
amid some disappointment that Nokia didn't declare an even richer
dividend.
Nokia holds a sizable portfolio of patents dating back to early
days of mobile phone and network industry, feeding hopes that
management can strike lucrative licensing agreements after the sale
of its struggling handset business to Microsoft Corp. last
April.
The nearly 5% slide in Nokia's stock price came despite strong
sales of latest-generation wireless telecom equipment in North
America which contributed to much better-than-expected net profit
in the three months to Dec. 31.
Nokia swung to a net profit of EUR443 million ($505 million), or
EUR0.11 a share, in the three months to end-December, beating a
median analyst forecast of EUR325 million, or EUR0.09 a share. The
company had reported a net loss of EUR26 million, or EUR0.01, in
the fourth quarter 2013, largely related to the poor performance of
its beleaguered handset unit.
Nokia is proposing a dividend payout of EUR0.14 per share, up
from the regular dividend payout of EUR0.11 a share the previous
year.
Nokia's growth in the U.S. was broad-based with more revenue
coming in from all its customers including some of the biggest
operators in the country, among them Verizon Communications Inc.,
Sprint Corp. and T-Mobile US Inc., Chief Executive Rajeev Suri said
on Thursday.
Describing the performance of Nokia's network-equipment
division, now its main business after selling its handset operation
to Microsoft Corp. in April last year, as "stellar," Mr. Suri said
strong sales in China where Nokia is the leading foreign-equipment
vendor also contributed to the good quarter.
The streamlined telecom-gear maker said revenue rose 9.2%to
EUR3.80 billion. Revenue in North America nearly doubled to EUR514
million from EUR263 million in the fourth quarter from the previous
year, while network-equipment sales in China rose 16%.
Still, it was the disappointing signs of Nokia's ability to
monetize its patent portfolio and the dividend that grabbed
investors' attention.
Revenue at Nokia's technology division, which manages its patent
portfolio, declined around 2% to EUR149 million from the previous
quarter, even though revenue was up 23% from the same period the
previous year.
"If there are any doubts that the patent portfolio's performance
will fall short of expectations, it is bound show as a reaction in
the share price," said Hannu Rauhala, an analyst with Pohjola
Bank.
Nokia's technology unit which includes its licensing business
accounted for 5% of Nokia's revenue in 2014 while 89% of Nokia's
revenue was generated by its networks business.
The dividend increase could have been greater as Nokia holds a
lot of cash after the sale of the handset business for EUR5.44
billion, said Mikael Rautanen, an analyst with Inderes in Helsinki.
"Nokia's balance sheet remains overcapitalized which gives the
company plenty of room to maneuver."
Nokia also owns a digital mapping and location service unit
called HERE. Berlin-based HERE's quarterly revenue rose to EUR292
million from EUR255 million in the year-earlier period owing to
greater demand from auto makers, Mr. Suri said.
Write to Juhana Rossi at juhana.rossi@wsj.com
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