Nokia has witnessed a troubling drop in sales during its first full quarter since the acquisition of rival Alcatel-Lucent and warned that revenues will decline this year on a like-for-like basis. Q1 2016 reflected the acquisition of Alcatel-Lucent, which resulted in a higher share count, as well as higher non-IFRS tax expenses due to unfavorable changes in the regional profit mix.
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First-quarter net sales fell 17% in North America, the company’s largest market, while declining 11% in the Middle East, 6% in Asia-Pacific and 5% in China.
In the company’s first earnings report since the 15.6-billion-euro acquisition, Nokia said the loss compared with a profit of 177 million euros a year earlier.
Much of those savings are likely to be found at the former Alcatel-Lucent mobile business, which overlaps considerably with Nokia’s legacy product lines.
The company started the cuts month, saying it would axe thousands of jobs worldwide, including 1,400 in Germany and 1,300 in Finland.
Nokia Corp. (NYSE: NOK) reported first-quarter 2016 results before markets opened Tuesday morning. Adjusted gross margin was 39.4 percent, surpassing the average estimate of 37.4 percent.
Nokia’s share price fell 2 per cent to 4.90 euros in early morning trading in Helsinki.
For all the latest news from the wireless networking and services sector, check out our dedicated mobile content channel here on Light Reading. The adjusted operating margin in the networks business will be above 7%, Nokia forecast.
Nokia said it expected networks sales in the full year to decline due to weak investing by mobile operators as well as its focus on integrating Alcatel-Lucent. Meanwhile, telecom providers world-wide are now cutting upgrade and expansion costs, as the rollout of new-generation wireless networks is almost complete in many markets.
“The shortfall was largely driven by Mobile Networks, where the challenging environment is not a surprise”, said Nokia Chairman and Chief Executive Rajeev Suri in a statement.
Suri said Monday that Nokia had earlier noted it expected some “market headwinds in 2016 in the wireless sector, and we continue to hold that view today”.
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Nokia suffered a net loss of 513 million euros (US$583 million) in the first quarter, the Finnish telecom equipment giant said Tuesday in its first earnings announcement after acquiring its French-American rival Alcatel-Lucent.
