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The head office of Nokia in Karamalmi, Espoo, on 6 April 2016.Nokia has reported that its turnover fell sharply in the first quarter of the year compared to the same period one year earlier.

The turnover of the network equipment manufacturer decreased by 500 million euros to 5.6 billion euros over the first three months of the year, representing a year-on-year decline of 9 per cent and a quarter-on-quarter decline of 27 per cent.

Rajeev Suri, the chief executive of Nokia, admits in a press release that he is disappointed with the first-quarter turnover but points out that the shortfall is attributable largely to the expectedly difficult conditions in the wireless infrastructure market.

He also calls attention to the profitability of the network equipment manufacturer in what is usually a difficult quarter.

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“I am pleased that we were able to deliver solid profitability in what is typically a seasonally weak quarter and at a time when the risk of integration-related disruption was high. While our revenue decline was disappointing, the shortfall was largely driven by mobile networks, where the challenging environment is not a surprise,” says Suri.

Nokia conceded that the turnover of both its networks and technology business declined from the previous year but added that the eight per cent decline in the turnover of the networks business was consistent with its outlook for greater-than-usual seasonal decline in the wireless infrastructure market.

The former handset manufacturer forecast already in its interim report for the final quarter of last year that the wireless infrastructure market would slow down in 2016.

Suri also estimates that the nearly 70 million euro increase in first-quarter operating profits – to 345 million euros – is an indication of the strategic value of the consolidation of Nokia and Alcatel-Lucent. “I am also pleased that we continue to see strong support from our customers, including those from the former Alcatel-Lucent,” he says.

The integration process, he reminds, has yet to be completed.

Inderes, an equity research firm, estimated before the earnings call of Nokia that the first-quarter results of other network equipment makers corroborate its impressions of tough market conditions. “Ericsson had an awful first quarter and Juniper issued a profit warning. Nokia warned of weak market conditions for early this year already in its fourth-quarter report,” it tweeted.

Aleksi Teivainen – HT
Photo: Antti Aimo-Koivisto – Lehtikuva
Source: Uusi Suomi

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