Ever since selling its phone business to Microsoft, the former rubber boot maker, Nokia has been doing rather well.
Now a network equipment maker, Nokia announced it would pay special dividends after reporting stronger than expected profits, as growth in China offset weaker demand in North America and Europe. We don’t know if it makes boots any more.
The Finnish outfit has secured regulatory approval for its proposed $17.1 billion takeover of Froggie rival Alcatel-Lucent.
Third quarter operating profit at the company’s network unit was $427 million, or 13.6 percent of sales.
That was roughly in line with $434 million year earlier but significantly above analysts’ average forecast of a profit of $324 million and a margin of 10.2 percent.
Nokia last year sold its once-dominant phone business to Microsoft and its navigation business to German car makers.
Curiously the company is thinking of releasing a smartphone again soon. Hard to think why. Maybe it should get back into the boot business.
Alcatel-Lucent is refusing to sell its undersea cables unit, which means that the former rubber boot maker Nokia will get its paws on the operation after completing its acquisition of the Franco-American group.
Nokia is spending $17 billion on Alcatel-Lucent as it wants to better compete with market leader Ericsson and low-cost Chinese powerhouse Huawei.
Alcatel had previously planned to sell a majority stake in Alcatel-Lucent Submarine Networks (ASN) or list the business separately. However it now opted to keep the unit instead.
The division, which has facilities in Calais, France and Greenwich, Britain, on the site where the world’s first transatlantic cable was manufactured in 1858, will become part of Nokia.
Ministers had thought of asking the French sovereign fund to take a stake in ASN, to ensure it keeps activities that are strategic to France’s surveillance apparatus on French soil.
But Alcatel-Lucent said France had surrendered on the idea of fighting against the submarine cable unit being bought by Nokia.
“We constantly exchange with the government, they are aware of our decision,” the spokesman said. “This will be part of discussions, but there was no objection,” a spokesman said. .
ASN has more than 575,000 kilometers of fiber-optic cable systems deployed worldwide, along with the maintenance of 330,000 kilometers of undersea systems.
Former Finnish rubber boot maker, Nokia is now back to black after selling its mobile phone business to Microsoft.
Nokia reported a surprise rise in second-quarter profits, helped by high-margin software sales and fewer low-priced contracts at its mainstay telecom network equipment business.
Nokia appears to be rolling in it and in April proposed a 15.6 billion euro take-over of its French rival Alcatel-Lucent.
Operating profit at its network unit was $343 million in the second quarter, or 11.5 percent of sales.
That was up from $307 million euro a year earlier, and well above analysts’ average forecast of a profit of $257 million euros and a margin of 8.3 percent.
Network equipment sales were $2.99 billion
The company also said its strategic review of its Here navigation business was now in an advanced stage.
Last week, Reuters claimed that Nokia was closing in on a deal to sell the maps to German car makers for about $3.29 billion.
Changes are afoot in the router market and virtualisation and pack optical technologies is set to capture a chunk of the service provider router and switch market.
That’s according to a report from market research company IHS, which said that carriers have firmed up plans to move services from edge routers and onto NFV servers.
They also intend to move metro and transport functions to packet optical transport systems.
However, Michael Howard, a senior analyst at IHS said revenue will grow slowly and the move doesn’t mean that spending on routers and switches won’t show a dramatic downturn.
However, he said that virtual routers – called vRouters, will grow by 125 percent worldwide between this year and next.
The entire service provider market amounted to $3.3 billion in the first quarter of this year, with Alcatel-Lucent, Cisco, Huawei and Juniper the leaders of the pack.
Market intelligence company ABI Research said that mobile broadband and the high speed performance of LTE means the market for mobile network monitoring and optimisation will be worth over $40 billion over the next five years.
And it’s China that’s leading the rush – with widespread adoption of SSL encryption being a game changer.
Practice director Joe Hoffman believes that mobile optimisation will become more important than ever before.
“The advent of all IP services, including VoLTE, VoWi-Fi and LTE-U require close attention from the operator,” he said. “All leading network infrastructure vendors, including Ericsson, Nokia Networks and Alcatel-Lucent, offer their own or partnered solutions. Likewise, the independents, such as Citrix, ByteMobile and Openwave Mobility, provide differentiated, targeted and ready-to-use solutions for every mobile broadband operator.”
ABI believes that capacity improvement will be such that there will be virtually free network and spectrum gear.
Huawei Technologies has said that it is not bovvered by the merger of telecoms equipment rivals Nokia and Alcatel-Lucent and will maintain its record growth in the EU.
One would think that Huawei would have much to fear from such a merger. The new company will become the Number 2 in wireless behind Sweden’s Ericsson. It will also have a more complete product line encompassing both mobile and fixed-line operations, putting it in a stronger position to compete with Huawei, the leading telecoms equipment maker
But Chief Executive Guo Ping told Reuters welcomed the deal, saying it would spur investment and competition, and expressed optimism about his company’s ability to expand its own network gear business.
He said that the merged company will be much more competitive and for the industry as a whole this is positive.
“This is combining one company that is very strong in the wireless business with another company (that is) very strong in fixed networks,” he added.
Huawei expects lucrative opportunities for its network gear business as more people use smartphones, everyday objects are connected to the web and machines are linked to each other via the Internet, Guo added. He said there could be 100 billion new connections in the next ten years.
He also said that Huawei’s exclusion from the United States over cybersecurity concerns would not stop the company’s growth.
Huawei announced plans for a new research institute in Brussels, signalling its intent to take part in Europe’s race to be at the forefront of the next generation of mobile broadband technology.
The former rubber boot maker Nokia has done what we predicted and written a cheque for the French Alcatel-Lucent.
Well, we say cheque, but it is pretty much an all-share transaction that values its smaller French rival at $16.6 billion.
Nokia will give each Alcatel-Lucent shareholder 0.55 shares in the combined company for each of their old shares. This will mean that 33.5 percent of the new company will be in Alcatel’s hands and Nokia having 66.5 percent.
The deal still has to go through the regulators and there might be a few problems with the French government saying “non.” Alcatel-Lucent is a French success story and the government is not too happy about foreigners who do not know how to cook properly getting their paws on it.
The deal will be finalised in the first half of 2016 and is expected to result in 900 million euro of operating cost savings by the end of 2019, the companies said on Wednesday.
Nokia has promised to keep France as “a vibrant centre of the combined company” and not to cut jobs beyond what Alcatel had already planned, especially protecting research and development sites at Villarceaux and Lannion.
Alcatel-Lucent has some 6,000 employees in France. Maintaining jobs will be a key demand of the French state for its backing of the deal.
Nokia’s takeover of Alcatel-Lucent will put the fear of Odin into mobile leader Sweden’s Ericsson and China’s Huawei which have the market pretty much stitched up like a kipper.
It will have stronger exposure to the important North American market, with key contracts with AT&T and Verizon and a fast-growing Internet routing business.
“The combined company is expected to have a stronger growth profile than Nokia’s current addressable market,” Nokia said, predicting a sales growth rate of about 3.5 percent for 2014 to 2019.
The combined company will have a global wireless market share of 35 percent, second only to Ericsson with 40 percent, and ahead of Huawei at 20 percent.
As French Alcatel-Lucent staff march on the company Bastille to complain about job cuts, the company boss has warned that the telecoms company could go under.
Alcatel-Lucent has been in the red since 2006 and missed some key technological shifts, its chief executive Michel Combes said.
He wants to slash 10,000 jobs worldwide, including 900 in France, and said that the cuts were Alcatel-Lucent’s last chance to stem years of losses and turn the company around.
Otherwise, he warned, the company could disappear.
Reuters reported how Combes told French lawmakers his plan differed from previous attempts to overhaul Alcatel since 2006 and he pledged to find new jobs for all 900 workers facing layoffs in France.
He said that the company did have a coherent and complete plan which will fix all the problems the company is facing and get it back on its feet.
More than 1,500 Alcatel-Lucent workers marched in Paris on Tuesday to protest against the plan, which involves closing several sites including the Orvault plant in northern France.
The Socialist government has pressed Alcatel-Lucent to limit job cuts and CFDT union leader Herve Lassale said workers would try to extract concessions from Combes.
The government which wants to end years of de-industrialisation and high unemployment, has warned it could use new labour rules to block the plan.
But Combes told lawmakers the firm had little choice but to cut operating costs and consolidate resources around fewer sites after losing $1.08 billion per year since its merger with US firm Lucent Technologies in 2006.
He said that his plan sets targets that are key to the survival of the company.
Combes took over Alcatel-Lucent in April after being CEO of Vodafone Europe from 2008 to 2012. He abandoned a plan by predecessor Ben Verwaayen that aimed to shut down Alcatel-Lucent’s activities in France.
Global telecoms giant Alcatel-Lucent is claiming the new world record for pushing data down a fibre cable.
It claims it has transmitted data at 31Tbps over a single long-haul 7200km optical fibre cable.
The experiment was carried out at by the firms R&D focused Bell Labs division on the Innovation City campus in Villarceaux.
It used 155 lasers, each operating at different frequencies and carrying 200Gbps of data over a 50GHz frequency grid.
The researchers managed to get that much data down the wire by cutting back distortions and noise on the line.
They did this using an enhanced version of Wavelength Division Multiplexing that splits light into different wavelengths so that it can carry more data.
Philippe Keryer, Alcatel-Lucent’ Chief Strategy and “Innovation Officer”, said that undersea fibre-optic transmission as integral to the digital economy and jacking up the bandwidth will improve the internet.
He said customers were facing increasing demand on their networks for data capacity and higher-speeds of transmission, so the carriers had to come up with ways to transform global data networks.
The evolution of the technology started in May 2011 when a team of German, UK and Swiss scientists successfully used Orthogonal Frequency-Division Multiplexing to send data at a rate of 26Tbps over a 50km long single-mode fibre optic cable.
Last year a Japanese team working out of NEC transmitted 4Tbps over a single “ultra-long haul” fibre optic cable without any repeaters.
Earlier this year there was a test in the UK of a new type of hollow fibre optic cable that yielded speeds of 73.7 Tbps.
The LTE push stands to make some serious money for base station providers and a range of other outfits involved in the process.
According to a Visiongain report, the world could spend as much as $6.37 billion on LTE gear this year.
Although 3G services were rolled out just five years ago, the mobile boom has generated more demand for bandwidth than the “old” standard can handle. That means 4G is expanding, quick, from Ethiopia to Europe. The leading LTE base station vendors are Nokia–Siemens Networks, Ericsson, Alcatel-Lucent, Huawei, ZTE, Samsung and NEC. Needless to say, the new wireless investment cycle is bound to have a trickle down effect on other companies.
As far as carriers go, the global LTE market is set to nearly double this year. Revenues will hit $10 billion for the first time this year and there is plenty of untapped potential. The US, Japan and South Korea lead the way, but LTE expansion in BRIC economies has been sluggish, according to Misco.
The number of commercial LTE networks currently stands at 145, active in 66 countries. The number of LTE subscribers is expected to pass 569 million by 2017.