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Apple settlement drives 73% jump in Finnish kit maker’s operating profit.
Nokia CEO Rajeev Suri on Thursday lowered his outlook for the network equipment market in 2017, after his company reported flat second quarter revenue.
"We expect our primarily addressable market with communication service providers to be slightly more challenging in 2017 than earlier forecast," Suri said, in a statement. "We now expect a decline in the market in the range of 3%-5%, versus our earlier view of a low-single digit decline. In addition, we continue to expect our Networks sales to perform in line with the market."
Nokia’s revenue for the three months to 30 June edged down to €5.63 billion from €5.67 billion a year ago, driven by the Networks division, where revenue fell 5% to €4.97 billion.
It was offset partially by Nokia Technologies, which saw revenue rocket 90% to €369 million on new and expanded patent-licensing deals.
In May, Nokia and Apple settled a patent-licensing dispute that had been ongoing since December 2016, and established a multi-year ‘business collaboration’ agreement.
"You could see the benefit of that agreement in Nokia Technologies’ results," Suri said.
Indeed, as well as the 90% increase in revenue, the Apple deal also drove Nokia Technologies’ operating profit up 158% year-on-year to €230 million. It helped to drive Nokia’s overall operating profit up by 73% to €574 million.
It helped to make up for another challenging quarter for Nokia Networks, where revenue fell to €4.97 billion from €5.22 billion a year earlier, led by Latin America, Europe, Greater China, and North America. Asia-Pacific and the Middle East and Africa were the only two regions that saw growth.
Despite the fall in revenue, Networks’ second quarter operating income increased to €406 million from €313 million, and Nokia’s overall gross margin expanded to 39.8% from 36.4%.
"Nokia’s disciplined operating model puts us in a strong position to succeed in conditions of all kinds and continue to deliver solid shareholder value," Suri said. "In addition, we are seeing catalysts in the United States, China and Japan that point to an acceleration of 5G and the commencement of meaningful rollouts in 2019."
