Network gear maker Nokia tops market expectations

Thu Oct 23, 2014 11:15am EDT
 
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By Jussi Rosendahl

HELSINKI (Reuters) - Nokia NOK1V.HE delivered quarterly profits well above expectations on Thursday, six months after selling its struggling handset business to Microsoft (MSFT.O: Quote) in a 5.6 billion euros ($7.1 billion) deal that transformed it into a pure play network equipment maker.

The Finnish company reported strong earnings from its core network gear unit and lifted the outlook for the business following large network roll-outs in North America and China.

Despite concerns over lower-margin deals in China, Nokia's network unit showed a core operating profit margin of 13.5 percent, up from 11.0 percent in the second quarter and topping analysts' average forecast of 9.9 percent in a Reuters poll.

Chief Executive Rajeev Suri said the unit saw growth in several regions and booked plenty of high-margin mobile broadband deals, but added it also benefited from one-off factors.

"There was some catch-up in sales in the third quarter with regard to some component shortages we had in the early part of the year," he told Reuters.

Nokia, which ranks third in the global network-equipment market after Ericsson (ERICb.ST: Quote) and Huawei Technologies Co Ltd HWT.UL, said it now expects the network unit's full-year core operating margin to be slightly above 11 percent.

That compares with its previous forecast of at or slightly above the higher end of its long-term target range of 5 percent to 10 percent.

Shares in the company rose 2.8 percent to 6.69 euros by 1406 GMT (10.06 a.m. EDT) after hitting 6.94 euros earlier on Thursday.   Continued...

 
A photo illustration of a man silhouetted against a Nokia logo in the central Bosnian town of Zenica January 23, 2014.   REUTERS/Dado Ruvic