Nokia Networks profits tumble
Finland’s Nokia Networks has revealed Q1 2015 results significantly lower than market forecasts, raising concerns over its planned acquisition of Alcatel-Lucent.
The vendor reported a drop of 61% in operating profit and a loss of €3 million for its mobile broadband division, which it has blamed on lower software sales and systems integration profit, currency hits, increased investment as well as challenging market conditions.
“Nokia delivered a 20% increase in net sales and a 25% increase in earnings per share in the first quarter,” said Rajeev Suri, Nokia CEO.
“Underlying these results was an excellent performance from HERE [Nokia’s mapping unit] and Nokia Technologies, while good growth at Nokia Networks was offset by unsatisfactory profitability.”
Suri added that the company was considering its options for HERE, which could suggest a sale.
Analysts have since raised concerns over Nokia’s commencing acquisition of Alcatel-Lucent, and Alexander Peterc, from Exane BNP Paribas, told Reuters that it may be better for the deal’s prospects if Alcatel also posted a weak first quarter.
“Otherwise, disgruntled shareholders deploring what they describe as low exchange parties in Nokia’s all-share bid for Alcatel might start campaigning for an upward revision of Nokia’s bid,” he said.
Nokia shares are now trading approximately 20% lower than before the Alcatel-Lucent deal was announced, and shares in Alcatel-Lucent have dropped by more than 7%.