Nokia Networks revenue plummets 12% in Q3 2016

nokia-at-mwc-2016Nokia Networks business revenue plummeted 12 percent in Q3 2016 – due to weak conditions in the global wireless infrastructure market.

Nokia said its sales were weak in Mobile Networks within Ultra Broadband Networks, and accounted for approximately 80 percent of the overall decrease in Nokia’s Networks business.

IP Networks and Applications also contributed to the decrease. This was partially offset by growth in Fixed Networks within Ultra Broadband Networks.

In Q3 2016, Nokia Networks achieved gross margin of 37.2 percent and operating margin of 8.1 percent, supported by continued strong operational performance and cost controls.

Nokia’s net sales in Q3 2016 were EUR 6.0 billion against EUR 6.4 billion. Nokia made loss of EUR 133 million in Q3 2016 against a profit of EUR 188 in Q3 2015.

How Nokia dropped sales

Nokia Networks, the prime business of Nokia, posted 12 percent drop in sales to EUR 5,322 million.

Nokia’s ultra broadband business generated EUR 3,903 million (–12 percent), IP Networks EUR 3,903 million (–13 percent) and IP Networks and applications EUR 1,419 million (–9 percent).

How Nokia wants to build biz

Nokia CEO Rajeev Suri said the telecom network company has the unique scope necessary to design and deliver end-to-end networks and anchor ourselves in the long-term purchasing strategies of mobile customers.

Nokia Networks has the capability to diversify into new areas where high-performance, end-to-end networks are increasingly required, such as for large Internet and enterprise vertical market companies.

“We have plans to target them further as we move forward. While the fourth quarter is expected to be soft from a topline perspective, I believe that we will meet our guidance for our Networks business of significant sequential sales and operating margin increase for Q4 and our full-year operating margin guidance of 7 percent to 9 percent,” said Nokia CEO Rajeev Suri.

What Ericsson said?

Ericsson earlier said its Q3 2016 sales fell 14 percent — mainly driven by 19 percent drop in networks business revenue.

Ericsson revenue was SEK 51.1 billion (–14 percent), while it posted net loss of SEK 0.2 billion in Q3 2016 against net income of SEK 3.1 billion in Q3 2015.

Ericsson said the negative industry trends from the first half of 2016 have further accelerated. The main reason is weaker demand for mobile broadband, especially in markets with a weak macro-economic environment.

Gross margin of Ericsson has declined to 28.3 percent from 33.9 percent following lower mobile broadband capacity sales, a higher share of services sales and lower sales in Networks business.

Operating margin of Ericsson fell to 0.7 percent from 8.6 percent, due to lower gross margin and lower sales, partly offset by lower operating expenses.

Baburajan K
[email protected]