Nokia operating profit increased 7% year-over-year to $1.2 billion
As demand for LTE equipment continues to decline, infrastructure vendors are eagerly waiting for 5G-related spending cycles to kick in as carriers deploy and commercialize next-generation networks. Nokia CEO Rajeev Suri said in a statement the Finnish company is poised to address 5G market needs in the 2019-2020 timeframe.
“Looking forward on the Networks side,” Suri said, “we expect our market to decline again in 2018, although at a slightly lower rate than our previous forecast, given early signs of improved conditions in North America. For 2019 and 2020, we expect market conditions to improve markedly, driven by full-scale rollouts of 5G networks. As those rollouts occur, Nokia is remarkably well-positioned. Unlike previous generations of technology, 5G requires a coordinated, holistic approach across all network elements, far beyond radio.”
Prior to announcing Q4 and full-year 2017 financials, Nokia unveiled major new product portfolios. The ReefShark chipsets include variants for digital front end to support massive multiple-input, multiple-output (MIMO), a baseband processor and an RFIC front-end module and transceiver. The Future X portfolio, based on research out of Nokia Bell Labs, provides product support for the “holistic approach” Suri mentioned through a combination of IP, optical, RF, software and silicon technologies.
Suri continued: “As a result of the acceleration of investment in 5G due to the opportunity provided by the accelerated timeframe of 5G deployments, Nokia’s operating margin will come under some pressure in 2018. That investment, combined with continued strong execution of our strategy to expand to new vertical segments, build a standalone software business, and maximize the value of our licensing business, will allow us to target improved results in 2020.”
For its networks business, financial highlights include:
- 2% net sales growth in Q4 “driven by IP Networks and Applications and by Ultra Broadband Networks;”
- A Q4 gross margin of 37.6 and operating margin of 11.1%;
- And a full-year 2017 decrease in net sales of 4% and operating margin of 8.3%
Nokia Technologies, the portion of the company focused on digital health, media and technology licensing, saw significant growth in both Q4 and 2017. This business group reported a 79% year-over-year net sales increase and 146% year-over-year increase in operating profit “primarily related to new license agreements.”
For detailed financial reporting, click here.
