Nokia tumbles to a loss on slowing network demand and Alcatel

The telecoms multinational based in Finland takes a hit as integration of former rival adds strain although combined sales soar with help from buy-out of French gear maker

The Nokia headquarters is seen in Espoo, Finland. Antti Aimo-Koivisto / Reuters

Nokia reported Thursday a second-quarter net loss of €665 million (Dh2.71 billion) due to weak demand for mobile networks and the ongoing integration of its acquired competitor Alcatel-Lucent.

The Finnish telecoms equipment maker said the loss compared with a profit of €347m a year earlier, a figure that does not include Alcatel-Lucent in the accounts.

The combined net sales of Nokia and Alcatel-Lucent were ¥5.6bn in the April-June period, compared with Nokia’s €2.9bn a year earlier when it had not yet merged with the French telecoms gear maker.

When comparing like-for-like businesses, Nokia’s revenue fell to €5.7bn from €6.4bn.

The chief executive Rajeev Suri said the company was now targeting cost savings of €1.2bn in 2018, an upgrade to the earlier announced estimate of combined Nokia and Alcatel-Lucent synergies of €900m.

Mr Suri said he was particularly worried over the declining trend in Nokia’s revenue that “reflects challenging market conditions” and he did not expect the market situation to improve in the near term.

In both North America and Europe – two of Nokia’s key sales areas – revenue dropped by 12 per cent year-on-year, while the fall was somewhat smaller in the Asia-Pacific region and China with a decline of 6 and 5 per cent, respectively.

Nokia is not the only company in the industry to suffer from meager demand as the wireless equipmemt maker Ericsson last month reported a 26 per cent drop in second-quarter profits, citing lower company investments amid a weakening global economy.

Nokia shares were down 5.5 per cent at 4.68 euros early trading in Helsinki.

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