- Title: Nokia shares plunge to 3-year low after warning of tough network markets
- Date: 27th October 2016
- Summary: SALVO, FINLAND (FILE) (REUTERS) EXTERIOR OF NOKIA PLANT NOKIA SIGN/LOGO ON FRONT OF BUILDING PEOPLE WALKING ABOUT IN THE TOWN VARIOUS EXTERIORS OF NOKIA OFFICES VARIOUS OF ROAD SIGN SHOWING NOKIA LOGO/GOODS IN DELIVERY EXTERIOR OF NOKIA BUILDING
- Embargoed: 11th November 2016 14:37
- Keywords: Nokia shares plunge 3-year low warning tough network markets
- Location: SALVO, FINLAND + LONDON, ENGLAND, UK
- City: SALVO, FINLAND + LONDON, ENGLAND, UK
- Country: Finland
- Topics: Company News Markets,Economic Events
- Reuters ID: LVA00155S7TE5
- Aspect Ratio: 16:9
- Story Text:Nokia has succumbed to a downturn in the telecoms equipment business, posting a sharp drop in quarterly earnings and warning that demand for the kit which drives global network traffic would shrink further in the coming year.
Its shares fell more than 7 percent to their lowest in three years.
The network gear market is in decline after demand for 4G equipment peaked last year and a new cycle of 5G network upgrades is not expected to begin until around 2020, a trend which earlier this month pummeled rival Ericsson.
So far Nokia is seeing scant benefit from the purchase of Franco-American Alcatel Lucent, bought in a 15.6 billion euro ($17 billion) all-share deal earlier this year, though the company said integration efforts were on track.
Nokia's third-quarter network sales fell 12 percent from a year ago to 5.32 billion euros against an average expectation of 5.39 billion. Operating profit for the unit fell 36 percent to 432 million.
The company said network sales were set to decline at a similar rate in the fourth quarter as in the third, and the market would continue to shrink next year.
Sweden's Ericsson earlier this month reported a more than 90 percent plunge in third-quarter profit and replaced its chief executive.
Yet Nokia is less dependent than Ericsson on mobile broadband demand, as the Alcatel-Lucent merger gave it a larger fixed-line network business.
Nokia's Suri said the company, which is cutting thousands of jobs worldwide, was on track with its Alcatel synergy programme which targets savings of 1.2 billion euros in 2018.
Nokia's total third-quarter operating profit fell 18 percent to 556 million euros, but that figure was buoyed by a one-off patent licensing payment.
The company also said Chief Financial Officer Timo Ihamuotila, hailed for Nokia's successful recent M&A moves, would quit to join Swiss engineering group ABB, to be replaced by insider Kristian Pullola.
Once known for its mobile phones, Nokia sold the handset business to Microsoft in 2014, leaving it with the networks business and a portfolio of technology patents. - Copyright Holder: FILE REUTERS (CAN SELL)
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