Nokia Corporation’s (NOK – Free Report) first-quarter 2017 earnings per share of €0.03 (approximately 3 cents) missed the Zacks Consensus Estimate of 4 cents. In the year-ago period, the company had reported earnings of €0.03 (3 cents) per share.
Net sales declined year over year (on a comparable combined company basis) to €5.4 billion (approximately $5.73 billion). Moreover, the top line missed the Zacks Consensus Estimate of $5.86 billion. This disappointing performance by the flagship Nokia Networks’ division was primarily due to weakness in the IP/Optical Networks and Fixed Networks subgroup.
Quarterly adjusted gross margin was 40.8% in the reported quarter compared with 39.7% a year ago. Operating margin increased 20 basis points (bps) to 6.3% on a year-over-year basis. In the first quarter, Nokia’s net cash from operating activities at the end of the quarter was -€470 million as against €510 million at the end of 2016.
Notably, this Finland-based company is rapidly expanding in the field of technology and wireless infrastructure. Additionally, it has entered into collaborations and agreements with leading names like Motorola Solutions Inc. (MSI – Free Report) and Clearfield Inc. (CLFD – Free Report) globally, despite competition. In fact, Nokia sued Apple Inc. (AAPL – Free Report) for patent infringement late last year.
Segmental Revenues
In the Nokia Networks segment, total revenue was approximately €4,902 million (around $5,223 million), down 6% year over year. The division includes Ultra Broadband Networks, and IP Networks and Applications. The decline in the Ultra Broadband Networks sub-group by 4% to €3,597 million along with reduction of 10% to €1,304 million in net sales of the IP Networks and Application, hurt the segmental sales.
Notably, net sales declined in all regions, apart from North America (7%), and Middle East and Africa (2%), which led to the segment’s below-par performance. Net sales declined by 33% in Latin America, 5% in the Asia Pacific, 3% in Greater China and 19% in Europe. Segmental gross margin improved 90 bps to 39.5% in the reported quarter. Quarterly adjusted operating margin was 6.6% compared with 6.5% a year ago.
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