Nokia Vows More Cost Cuts After Profit Drop
August 04 2016 - 3:00AM
Dow Jones News
Nokia Corp. reported a 45% fall in second-quarter profit that
fell short of market expectations and vowed to step up costs cuts
after its recent acquisition of rival French telecoms-equipment
supplier Alcatel-Lucent SA.
The Finnish telecom-equipment maker said on Thursday that profit
shrank to €194 million ($215.3 million) in the three months to
end-June compared with €355 million profit in the year-earlier
period as a stand-alone company.
Revenue, while up sharply at €5.68 billion on the Alcatel deal
from €2.92 billion reported in the same period last year, fell 11%
when compared with the €6.36 billion in combined revenue Nokia and
Alcatel-Lucent reported in the second quarter last year.
Nokia said the second-quarter figures weren't prepared according
to international accounting standards, known as IFRS, in excluding
costs related to the Alcatel acquisition in addition to a range of
other items that weren't necessarily indicative of Nokia's
underlying performance.
The decline in sales was largely due to a weak quarter in mobile
networks, Nokia said. The Finnish company's sluggish three months
mirrors a sector-wide trend of slowing demand and increased
competition in wireless telecom gear
In recent months, the industry has been severely hit by slower
demand for network upgrades from telecom carriers in established
markets, as many of them last year completed the rollout of
new-generation wireless networks, while service providers in
emerging markets face faltering economic growth.
At the same time, Nokia is facing stiff competition from Chinese
companies Huawei Technologies Co. and ZTE Corp., two players which
have gained significant market shares in a few years' time by
offering innovative products at competitive prices.
Nokia said it is now targeting €1.2 billion in annual cost
savings by 2018, compared with €900 million it had announced
before.
Analysts, according to a poll by data provider FactSet, had
estimated Nokia's second-quarter profit at €207 million and revenue
at €5.76 billion.
Write to Matthias Verbergt at Matthias.Verbergt@wsj.com
(END) Dow Jones Newswires
August 04, 2016 02:45 ET (06:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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