NSN scrambles profit in Q4; ZTE expects 50% rise in profits

Having reported that its 2009 revenues had fallen by 18 per cent to €12.57 billion, Nokia Siemens Networks (NSN) managed some success by scraping into profitability in Q4/09 with net income of €17 million. Unfortunately, this turnaround had little impact on the overall 2009 figures with NSN posting operating losses of €1.64 billion - although €1.1 billion of this loss was as a result of significant goodwill impairment charges taken in Q3/09.

This slide in NSN's revenues now puts the company into third position behind Ericsson and Huawei, with professional services playing an increasing role in keeping the company afloat. This sector of NSN's business accounted for €1.7 billion - nearly 47 per cent - of the fourth quarter's revenues of €3.625 billion.

The company repeated its forecast that the market for fixed/mobile networks and services would be flat in 2010 compared to 2009, and also reiterated its claim that it would gain market share, and that it would grow its revenues despite the stagnant overall sector.

However, it may have to wait awhile for that turnaround. Its guidance for the current first quarter of 2010 is for a year-on-year drop in revenue to between €2.6 billion and €2.9 billion, down from almost €3 billion. And its spell in the black won't last long either, with NSN expecting to report an operating loss in the quarter, and to have a razor-thin operating margin of between zero and 2 per cent.

These results put the levels of problems facing NSN's management into focus with ZTE indicating that it expected profits to rise between 43 and 56 per cent as it benefitted from an export boost and increased spending in its home market. The company said it was on track to report a net profit of around €350 million for 2009, up from €240 million in 2008.

For more on this story:
Rethink Wireless & Reuters

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