Nokia profits dropped by nearly half to 332 million euros from a year earlier, and turnover dipped by around 11 percent. The company had warned in advance that its takeover of French rival Alcatel-Lucent at the beginning of this year would affect its results.
The result was some 15-20 percent below analysts’ expectations.
"The main factor behind this is general market weakness, especially in the wireless networks segment," said analyst Mikael Rautanen of Inderes consultancy. "Operators’ investments are on ice at the moment in almost every region."
Market uncertainty
Rautanen says that the company’s biggest challenges are uncertainty in global markets and the risks associated with the Alcatel-Lucent merger.
"In these conditions it’s not really possible to record a good result," said Rautanen.
In the wake of the results Nokia has said it will look to cut costs again. That move doesn’t surprise Rautanen, who says the company has to keep pace with competitors who are also slashing their expenditure.
"[Nokia's] competitor Ericsson has already increased its own savings targets and it was known that Nokia will also have to tighten the screws," said Rautanen. "It’s a question of a continual need to make operations more efficient because competition is so keen."
Rautanen says that the savings drive could hit Finland hard, as the old Nokia’s operations are focused on network technologies, where the market is weak, whereas Alcatel-Lucent’s are much more diversified.