Nokia made an operating profit of 337 million euros (+61 percent) or $383 million.
Nokia posted net loss of 513 million euros or $584 million due to lower demand in mobile networks and a drop in overall revenue despite its acquisition of Alcatel-Lucent for 15.6 billion euros. Nokia said the loss compared with a profit of 177 million euros a year earlier. The two figures are not directly comparable because Nokia’s acquisition of the French-American networks operator was not completed until January.
Nokia, after the acquisition of Alcatel-Lucent, showed less impressive performance in all its divisions during the first quarter of 2016. Q1 2016 is the first full quarter for the combined business units of Nokia and Alcatel-Lucent.
Nokia’s generated 5,181 million euros (–8 percent) from Networks business, 3,729 million euros (–12 percent) from Ultra Broadband Networks, 1,452 million euros (+1 percent) from IP Networks and Applications and 198 million euros (–27 percent) from Nokia Technologies.
Nokia’s Networks business’ 8 percent sales decrease was due to Ultra Broadband Networks, which declined 12 percent year-on-year and 27 percent sequentially.
Nokia said its generated 21 percent revenue from Asia Pacific, 23 percent from Europe, 11 percent from Greater China, 7 percent from Latin America, 8 percent from Middle East & Africa and 30 percent from North America in Q1 2016.
The first quarter revenue of Nokia fell in all regions excluding Latin America.
Nokia said its Networks business net sales in the Asia Pacific region including India decreased primarily due to Ultra Broadband Networks. The decrease in Ultra Broadband Networks was primarily due to Mobile Networks, partially offset by Fixed Networks.
The telecom network vendor is expecting a decline in sales in 2016. Nokia is expecting a flattish Capex (capital expenditure) environment in 2016 for the company’s overall addressable market. The company is also expecting a declining wireless infrastructure market in 2016. It will focus on the integration of Alcatel-Lucent, particularly in the first half of 2016.
On Alcatel-Lucent integration
“We are targeting synergies that are both more than and faster than our original plan. We already have agreed transition plans that cover the most pressing areas of portfolio overlap with most of our top customers,” said Nokia CEO Rajeev Suri.
Nokia has begun the process of reducing over-lapping personnel including initial reductions in the United States and several other countries.
It also started to consolidate real estate footprint with several sites already closed and thirty more scheduled for the current quarter.
Nokia completed 40 projects with suppliers to drive procurement savings, with 200 more projects currently underway and plans for hundreds of additional projects to be launched largely over the course of Q2 2016.