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Finnish vendor lowers outlook for network equipment market; CFO resigns.
Nokia on Thursday lowered its outlook for the global equipment market after third-quarter revenue at its networks business plunged.
The Finnish vendor reported group revenue of €5.95 billion, down from €6.40 billion last year. Nokia’s networks business, which accounts for the vast majority of its total revenue, saw year-on-year revenue drop 12% to €5.32 billion, driven mainly by weak sales of mobile equipment.
Operating profit slumped 18% to €556 million, led again by Nokia Networks, which saw operating profit fall to €432 million from €678 million.
In a statement, Nokia CEO Rajeev Suri said market conditions were "softer than expected," particularly in mobile infrastructure.
Nokia revised down its market outlook to a declining capital expenditure environment in 2016, compared to its earlier guidance, which predicted a flat capex market this year.
"As we look forward, we expect those [market] conditions to stabilise somewhat in 2017, with the primary addressable market in which Nokia competes likely to decline in the low single digits for that year," Suri said.
Revenue at the networks division was down across the board on a regional basis, led by Latin America, which fell by 22% year-on-year to €337 million. Nokia’s biggest region, North America, saw revenue fall 6% to €1.63 billion.
Europe recorded an 18% year-on-year revenue decline; Asia-Pacific was down by 10%; Greater China fell 13%; and the Middle East and Africa declined by 7%.
The one bright spot in the quarter was Nokia Technologies, which oversees the company’s R&D and intellectual property licensing activities.
The division’s third-quarter revenue jumped to €353 million from €169 million in Q3 2015, while operating income surged to €225 million from €84 million.
In a separate statement, Nokia announced that CFO Timo Ihamuotila has resigned, and will step down from his position on 31 December to take on an advisory role before leaving the company at the end of next February.
Ihamuotila is leaving Nokia to become CFO of Zurich-headquartered industrial technology company ABB.
"Timo will be missed, but given that he rejoined Nokia in 1999, and now has been in the CFO role for seven years, I understand and support his desire for a new challenge at this point in his career," said Suri.
"Timo has helped make Nokia a stronger and better company, and he has my admiration," he said.
Kristia Pullola, who currently serves as Nokia’s SVP and corporate controller, will become the vendor’s new CFO from 1 January.
"After over 15 years with the company, it is time for me to take on a new challenge in a new company in a new industry. I am pleased to see a great long-time colleague taking over the role, and I leave knowing that the company is well-positioned for the future and focused on the right areas, with strong execution capabilities and a great team. Nokia will always have a place in my heart and I wish everyone in the company the very best for the coming years," Ihamuotila said.
