Nokia and its rivals, Ericsson and Huawei, are not having a good time as telecom operators’ demand for faster 4G mobile broadband equipment has peaked, and upgrades to next-generation 5G equipment are still years away.
Fourth-quarter group earnings before interest and taxes fell 27 percent from a year ago to $1.01 billion, but about 25 percent better than the cocaine nose jobs of Wall Street predicted.
The networks unit’s sales in the quarter fell 14 percent, more than expected, but its operating margin came in at 14.1 percent, ahead of a market forecast of 11.7 percent.
Nokia said that while networks sales were set to decline further this year, profitability could improve from a 2016 margin of 8.9 percent.
Chief Executive Rajeev Suri said in a statement that he was disappointed with Nokia’s topline development in 2016, he expected its performance to improve in 2017. He saw potential for margin expansion in 2017 and beyond, as market conditions improve and sales transformation programmes gain traction.
Still in the current market, Nokia’s results are strong. Nokia bought Alcatel-Lucent last year in response to industry changes and is currently axing thousands of jobs as it seeks to cut 1.2 billion euro of annual costs by 2018.
Nokia was caught out by the rise of smartphones and ended up selling its handset business to Microsoft in 2014, leaving it with the networks business and a portfolio of technology patents.