Nokia is showing signs that it has turned around its fortunes following the sale of its ailing cellphone unit to Microsoft. The slimmed-down Finnish company said today that it made a third-quarter net profit of 747 million Euros ($950 million) of the year, compared with a 91 million Euros loss in the same period last year. Also Read - Nokia C20 Plus budget smartphone launched: Check specs, price and other details
The result beat expectations and Nokia Corp. stock rose more than 3.6 percent to 6.75 Euros in late trading in Helsinki. The profit came despite a 1.2 billion Euro impairment charge following revaluing the HERE mapping and locations services. Also Read - Nokia C01 Plus with an upgraded processor and bigger battery launched
CEO Rajeev Suri said he was pleased to note strong growth in Nokia’s three remaining operations networks, mapping and software. Revenue in the third quarter grew 13 percent to 3.3 billion Euros, from 2.9 billion a year earlier. Also Read - Apple’s Craig Federighi admits the level of Mac malware is not acceptable, iOS fairs better
Suri said he was particularly satisfied by the performance of the key networks sector, which recorded near-record profits. He added that the division, which accounts for 90 percent of Nokia’s total sales, is expected to record a full-year operating margin of 11 percent, up from the earlier estimate of 5 to 10 percent.
Neil Mawston from Strategy Analytics near London said Nokia had clearly benefited from ridding itself of the handset unit that had been unable to meet the challenges posed by Apple’s iPhone and Samsung, as well as cheaper Chinese competitors.
“Profits were up fairly strongly. Now that they’ve shaken off the phone side of things, Nokia is able to operate more freely and is doing better,” Mawston said. “The mobile broadband operations are giving them a lift up and they should be doing well.”
Mawston cautioned that the networks market is “highly cyclical” and that Nokia needs to continue to control costs. The company said annual expenditures for continuing operations were expected to be 250 million Euros this year, up from an earlier estimate of 200 million Euros. Also, it said investments in technologies and patent licensing “will take time to come to fruition.”
Suri, who joined Nokia in 1995, took over as CEO in May after the completion of the $7.2 billion sale of the handset and services unit to Microsoft. He said the company would continue to develop its mapping and locations services, providing HERE maps, which has a near 80 percent global market share, for phones using the Android operating system, as well as previously providing Samsung users with Nokia maps.
Today, Nokia appointed Sean Fernback as president of the mapping and location services division. He joined the company from TomTom in 2014.