Thu, Jul. 30, 12:20 PM
- Nokia's (NYSE:NOK) Q2 revenue of €3.21B (+9% Y/Y, $3.51B) missed a €3.29B consensus. However, EPS of €0.09 ($0.10) beat a €0.05 consensus. Merger partner Alcatel-Lucent's (NYSE:ALU) Q2 revenue of €3.45B (+5% Y/Y, $3.76B) missed a €3.53B consensus, and EPS of -€0.02 (-$0.02) missed a €0.00 consensus. However, expectations were low on account of soft global telecom capex.
- Nokia's core Networks unit had Q2 revenue of €2.73B, +6% Y/Y. The HERE mapping/navigation unit (on the block) had revenue of €290M (+25%), and the Technologies IP licensing unit revenue of €193M (+31%). HERE/Technologies growth helped gross margin rise 270 bps Y/Y to 46.7%. Op. margin rose 440 bps to 16.2%.
- Nokia forecasts Networks, HERE, and Technologies will all see 2015 revenue growth, and that Networks op. margin will be near the midpoint of an 8%-11% long-term target range. The 2015 capex budget is at ~€250M.
- In spite of its EPS miss, Alcatel posted free cash flow of €65M (€158M excluding restructuring costs), the first time it had positive Q2 FCF since the 2006 Lucent merger. A 220 bps Y/Y increase in gross margin to 34.8% (aided by cost cuts and a mix shift towards software) helped out.
- Alcatel's Core Networking segment was strong in Q2, with sales rising 22% Y/Y to €1.68B (+10% exc. forex). Within the segment, IP routing revenue rose 17%, IP transport (optical) 30%, and IP platforms (IMS/VoLTE software) 19%. Access segment sales fell 7% to €1.78B (-20% exc. forex) - wireless access (mobile infrastructure) revenue fell 12%, and fixed access (broadband equipment) rose 5%.
- If not for a weak euro, Nokia and Alcatel's sales would've respectively fallen 1% and 9% Y/Y. Nokia ended Q2 with €3.83B in net cash and other liquid assets; Alcatel ended Q2 with €151M in net cash/investments.
- Bernstein's Pierre Ferragu, reacting to Nokia's numbers: "“Nokia continues to demonstrate excellent management execution (with Nokia Networks returning to 11.5% operating margin) and strong positioning in Wireless. This can only bode well for the upcoming integration of Alcatel-Lucent.”
- Nokia: Q2 results, PR (.pdf). Alcatel-Lucent: Q2 results, PR (.pdf)
Thu, Jul. 30, 4:04 AM
Thu, May 7, 1:46 PM
- Alcatel-Lucent (NYSE:ALU) and merger partner Nokia (NYSE:NOK) are rallying after Alcatel posted Q1 adjusted op. income of €88M, up strongly from €33M a year ago and in-line with estimates. A 230 bps Y/Y increase in gross margin to 34.6% drove the growth.
- The company also reiterated its target of seeing positive free cash flow for the whole of 2015, and predicted North American sales (weak in Q1) would rebound in 2H15. FCF for seasonally weak Q1 was -€332M.
- A declining euro led revenue to rise 9% Y/Y on a euro basis; it fell 4% in constant currency. Operating expenses rose 12% in euros, and were flat in CC. Alcatel ended Q1 with €262M in net cash.
- Segment performance: Wireless Access (mobile infrastructure) revenue +19% Y/Y to €1.18B. Fixed access (broadband equipment) +10% to €506M. IP routing +6% to €583M. IP transport (optical networking) +8% to €492M. IP Platforms (software) +7% to €375M. Managed Services -21% to €78M.
- Wireless sales benefited from strong Chinese 4G demand, and were hurt by soft U.S. demand (Ericsson can relate). IP Routing was strong in EMEA and Latin America, and weaker in North America; Alcatel notes it had 21% of the 2014 global IP routing market (per Dell'Oro). IP Transport benefited from 100G optical sales (47% of Q1 WDM line cards), and IP platforms from IMS/VoLTE, network analytics, and customer support software demand.
- In tandem with the report, Alcatel CEO Michel Combes is defending the Nokia deal against critics. After Alcatel and Nokia sold off last week in response to Nokia's Q1 results, #2 Alcatel shareholder Odey Asset Management (5%+ stake) called the deal terms "unacceptable."
- Combes: "The strategic rationale of the deal does not depend on the performance of an isolated quarter." SA author AtonRa Partners thinks Alcatel's Q1 numbers could "potentially force Nokia to sweeten the terms of the deal."
- Alcatel's Q1 results, PR, earnings release (.pdf)
Thu, Apr. 30, 4:29 AM
- Nokia (NYSE:NOK) -7.9% premarket after posting a 61% profit drop at its core networks business due to lower software sales, higher costs and challenging conditions in Europe and Latin America.
- Nokia reported Q1 operating profit of €85M in its networks division, down from the €216M a year earlier. Operating margin declined to 3.2% from 9.3%.
- Chief Executive Rajeev Suri also defended the terms of the company's pending acquisition of Alcatel-Lucent (NYSE:ALU), saying that many investors have given "very strong, good feedback."
Thu, Apr. 30, 1:35 AM
Thu, Jan. 29, 3:32 AM
- "While 2014 was a year of reinvention, we see 2015 as a year of execution," announced Nokia's (NYSE:NOK) chief executive Rajeev Suri, saying the company was ready to take more steps to grow this year.
- Net profit in the three months to end-December quarter was €443M ($505M), or €0.11 a share, beating a median analyst forecast of €325M, or €0.09 a share.
- The stronger-than-expected quarterly profits was lifted by robust sales of latest-generation wireless telecom equipment in North America.
- Update: Nokia forecasts weakening profitability in 2015, saying adjusted operating margin at its network division will probably shrink this year.
- NOK -2.8% premarket
Wed, Jan. 28, 5:30 PM
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Nov. 14, 2014, 8:04 AM
- In tandem with its 2014 Capital Markets Day (webcast), Nokia (NYSE:NOK) guides for 2015 Nokia Networks sales to be up Y/Y (no specific number is given). Networks' long-term op. margin target range has been raised to 8%-11% from 5%-10%; 2015 op. margin is expected to be in the new target range.
- Long-term, Nokia is aiming for Networks revenue to grow "slightly faster than the market." Yesterday, rival Ericsson forecast its total addressable market would see a 3%-5% CAGR from 2013-2017.
- The Here unit is also expected to see revenue grow Y/Y; its op. margin is expected to be in a 5%-10% range. Nokia Technologies (IP licensing) revenue is expected to be up, not counting expected Samsung arbitration revenue; the unit's opex is expected to "increase meaningfully."
- 2015 capex guidance is at €200M ($250M), financial income/expenses guidance at -€160M (-$200M), and Common Functions opex guidance at €120M ($150M).
Oct. 23, 2014, 4:54 AM
- Nokia (NYSE:NOK) shares +8.1% premarket after the telecom-equipment supplier reported net profit of €747M ($941M) compared with a €91M loss in the three months to end-September last year, helped also by a large tax gain in the quarter.
- The company says net sales increased to about €3.3B, the first annual rise since the first quarter of 2011, benefiting from the deployment high-speed mobile networks in North America and China.
- Nokia also gave a more bullish full-year financial outlook, saying it expects an operating profit margin slightly above 11%, having previously expected the margin at high single digits.
Jul. 24, 2014, 9:29 AM
- Nokia's (NYSE:NOK) telecom equipment unit (Nokia Networks) saw its revenue drop 8% Y/Y in Q2 to €2.57B (87% of all revenue from continuing ops). But that was an improvement from the 17% drop seen in Q1. Networks revenue is still expected to grow Y/Y in 2H.
- In addition, the unit's mobile broadband (equipment) revenue grew 6% to €1.36B, after being flat in Q1. Its services revenue declined 19% to €1.19B, after falling 25% in Q1. China (+18%) was strong, Latin America (-35%) was weak.
- Division op. margin fell 80 bps to 11%. But Nokia now expects Networks' 2014 op. margin to be "at or slightly above the high end" of a long-term target range of 5%-10%. The company previously guided for the margin to be "towards the higher end" of the range.
- Networks' sales were hurt by contract exits and divestments, lower maintenance/implementation work, and falling 3G orders. They benefited from rising 4G and core network orders (boosted by rising data traffic).
- Here revenue rose fractionally to €233M after declining 3% in Q2. Technologies (IP licensing) revenue rose 1% to €147M after growing 7% in Q1.
- Gross margin +40 bps to 44%. Nokia ended Q2 with €6.5B in net cash. It expects to start its buyback program soon.
- Alcatel-Lucent (NYSE:ALU) is also up. Nokia and Alcatel both rose last week following's Ericsson's Q2 numbers.
- Q2 results, PR (.pdf), slides (.pdf)
Jul. 24, 2014, 6:22 AM
Jul. 18, 2014, 10:55 AM
- After declining 13% Y/Y in Q1, Ericsson's (ERIC +8.3%) Networks (mobile infrastructure) sales rose 3% in Q2 to SEK29B ($4.26B), thereby fueling a revenue beat.
- That, in turn, is sparking a rally in rivals Alcatel-Lucent (ALU +5.3%) and Nokia (NOK +2.7%). Nokia reports on July 24, and Alcatel on July 31.
- Ericsson's remarks suggest mobile data demand drove the turnaround: Much of its sales growth came from radio access (base station) demand; sales of IP edge and IMS products were also strong; and capacity upgrades in "advanced LTE markets" (such as the U.S.) were solid due to "operators’ focus on network performance as a key differentiator." 11 new contracts were signed for Ericsson's SSR 8000 routers.
- "The usage of networks on 4G is high so operators need greater density and improvement in capacity," says CEO Hans Vestberg. He adds orders are finally being fulfilled for Chinese 4G contracts.
- Global Services revenue remains soft, declining 7% to SEK23.1B ($3.38B) after falling 5% in Q1. Support Solutions +21% to SEK2.8B ($410M) vs. +13% in Q1.
- Gross margin was 36.4%, -10 bps Q/Q but +400 bps Y/Y. Op. margin jumped 280 bps Y/Y to 7.3%. "To us, industry fundamentals will strengthen as mobile broadband networks mature, allowing Ericsson and its peers to present higher profitability," predicts ABG's Sundal Collier.
- Q2 results, PR (.pdf)
Apr. 29, 2014, 3:02 AM
- As expected, Nokia (NOK) has appointed networks boss Rajeev Suri as CEO, and the company said it plans to return over €3.1B ($4.15B) to shareholders using the cash from the sale of its handset business to Microsoft.
- The firm also said that excluding the operations sold to Microsoft, it swung to a net profit of €108M from a loss of €98M a year earlier. Sales tumbled 15% to €2.66B and missed consensus of €2.85B. Revenue at the network unit dropped 17% to €2.33B, hurt by lower services sales, currency fluctuations and divestments. (PR)
- Suri will replace Nokia Chairman Risto Siilasmaa, who has served as interim CEO since the announcement of the Microsoft deal in September. As head of Nokia Solutions & Networks, Suri is credited with returning it to profitability.
- Nokia intends to pay dividends of €1.8B, comprised of at least €800M in ordinary dividends for 2013 and 2014 of €0.11 a share and possibly more for this year, and a €1B special dividend of €0.26 a share. The company intends to repurchase €1.25B in shares over two years as well.
- Nokia will cut interest-bearing debt by €2B by 2016 as part of a plan to get back its investment-grade credit rating. The plan should save €100M a year in interest. (PR)
Apr. 28, 2014, 5:30 PM
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Jan. 23, 2014, 11:22 AM
- The reaction to Nokia's (NOK -9.4%) Q4 report is very different from the one that followed its Q3 report, as investors worry about a 22% Y/Y drop in NSN sales (follows a 26% drop in Q3) and a 320 bps Y/Y drop in the division's op. margin to 11.2%. Excluding divestments/contract exits, sales fell 15%.
- NSN's mobile infrastructure sales were relatively healthy, dropping 12% Y/Y to €1.56B after falling 26% in Q3. But its services sales fell 22% to €1.54B, nearly on par with Q3's 23% drop.
- NSN's sales fell 21% in Europe, 13% in the Middle East & Africa, 23% in Asia-Pac, 38% in North America, and 35% in Latin America. They managed to rise 2% in Greater China (lifted by 4G buildouts).
- Also: The Here division (mapping/location services) saw a 9% Y/Y sales drop to €254M, and the Advanced Technologies unit (patent licensing/R&D) saw its sales fall 20% to €121M. However, Nokia predicts the business, which could have more negotiating leverage following the Microsoft deal, will produce €600M/year in sales.
- Mobile infrastructure rivals Alcatel-Lucent (ALU -2.4%) and Ericsson (ERIC -1.9%) are following Nokia lower on a down day for equities. Ericsson reports on Jan. 30, and Alcatel on Feb. 6.
- Nokia's Q4 results, details/guidance
Jan. 23, 2014, 7:55 AM
- Q4 NSN sales -22% to €3.1B ($4.2B), dragged down by asset sales. Adjusted operating profit fell to €349M from €576M a year earlier.
- Expects NSN operating margins of 1-9% in Q1 vs forecast of 7.6% by Nordea analyst Sami Sarkamies and 11.2% in Q4. FY profit margin will be "toward the higher end" of a 5-10% profit range.
- Ends the quarter with €9B in gross cash.
- Sales at the devices business, which is being sold to Microsoft (MSFT), are €2.63B ($3.56B), -29% on year and -4.5% on quarter. "Strong momentum of competing smartphone platforms" and a difficult transition to Lumia from Symbian phones contributed to falling smartphone sales.
- Nokia (NOK) shares -2.3%. (PR)
NOK vs. ETF Alternatives
Nokia Oyj is a mobile communications company. The Company has three business: Networks, HERE, and Technologies and four business segments: mobile Broadband and Global Services within Networks, HERE, and Technologies.
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