Nokia Earnings Preview: What To Watch?

by Trefis Team
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Nokia is set to report its Q3 2016 earnings on October 27th. We would like to remind investors that Nokia now reports its results as a combined entity with Alcatel-Lucent. For the third quarter, we expect Nokia’s growth to have been under pressure yet again, as was the case in the first two quarters. Nokia’s networks division saw its revenues falling 8% in the first quarter and 12% in the second, owing to a lull in global telecom spending on wireless networks and a weak economic environment in Europe. And a notable improvement in the third quarter was unlikely since the scenario won’t improve until the next round of network upgrades later in the decade.

While weak carrier spending would have impacted Nokia’s top line and bottom line alike, the company’s plans to cut costs may have had some positive impact on its profitability. Immediately after reporting the results for the second quarter of 2016, Nokia uplifted its cost cutting goals to EUR 1.2 billion by 2018, up from its earlier target of EUR 900 million. The company is looking to aggressively cut jobs, which makes sense post its merger with Alcatel-Lucent, which would have created a lot of redundancies.

What is likely to be the highlight of the quarter is the excitement surrounding Nokia’s re-entry into the smartphone domain. With Nokia’s non-competitive deal with Microsoft about to end, the company is reportedly gearing up to launch two flagship smartphones bearing Nokia’s  brand and powered by Android OS. The dates for the release are not yet confirmed, but it is certain that the response to these smartphones will pave the way for Nokia’s future in the domain. The market is competitive and Nokia would have to work hard on the features offered to set its devices apart.

Have more questions about Nokia? See the links below:

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Nokia
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