Nokia (NOK) Tops on Q3 Earnings Despite Operating Loss
Nokia Corp. (NOK) reported strong third-quarter 2014 financial results wherein both the top and bottom line surpassed the Zacks Consensus Estimate. In Apr 2014, the company sold its struggling mobile phone business to Microsoft Corp. (MSFT). Post-divestiture, Nokia’s Network division has become its core growth area.
The Network division is strongly poised for significant growth in sales, with its 4GLTE networks widely expanding in North America and China. The company is already showing signs of returning to profit as China Mobile Ltd. (CHL) and China Telecom Corp. Ltd. (CHA) are deploying 4GLTE networks across its markets. Nokia currently carries a Zacks Rank #2 (Buy).
Quarterly net profit from continuing operations came in at approximately $1,008.4 million or 25 cents per share compared with $183.1 million or 5 cents in the prior-year quarter. However, quarterly adjusted (excluding special items) earnings per share of 12 cents were better than the Zacks Consensus Estimate of 8 cents. On the other hand, quarterly net revenue stood at approximately $4,410.3 million, reflecting year-over-year growth of 13% and surpassing the Zacks Consensus Estimate of $4,051 million as well.
Quarterly adjusted gross margin was 44.5% in third-quarter 2014 compared with 42.9% in the prior-year quarter. Operating loss for the reported quarter was 1,106.6 million against an operating profit of $268 million in the year-ago quarter. At the end of the reported quarter, Nokia had approximately $6,667.2 million of net cash and marketable securities compared with $3,201.6 million at the end of the prior-year quarter.
Nokia Networks Segment
Total revenue was approximately $3,900.8 million in the third quarter, up 13% year over year. Quarterly adjusted operating margin was 13.5% against 8.4% in the year-ago quarter.
HERE Segment
Quarterly total revenue was approximately $313.1 million, up 12% year over year. Quarterly adjusted operating profit was nil against $27.9 million in the prior-year quarter.
Nokia Technologies Segment
Quarterly total revenue came in at approximately $201.7 million, up 9% year over year. Quarterly adjusted operating profit was approximately $130 million, up 17% from the year-earlier quarter.
Outlook
For fiscal 2014, adjusted operating margin for the Nokia Networks segment is projected slightly above 11% while the company expects to generate EUR 600 million from the Nokia Technologies Segment in fiscal 2014. Management also anticipates capital expenditure of EUR 250 million for fiscal 2014.
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