Nokia reports first-quarter loss but sees business momentum improving

Nokia sign (Nokia)
Nokia expects slower spending by some customers in North America will be offset with higher spending by others. (Nokia)

Nokia reported a loss of about $520 million in its first quarter of 2017, but CEO Rajeev Suri said business momentum is improving and the company is optimistic about its standing in the North American market.

Net sales declined year-over-year to about $5.73 billion. The company blamed much of its weakness in the networks division due to poor performance in the IP/Optical Networks and Fixed Networks subgroup.

In North America, Nokia achieved 7% year-on-year sales growth, helped somewhat by currency fluctuations. Suri said the company expects slower spending by some customers will be offset by higher spending by others.

North America accounted for 35% of Nokia’s Networks business in the first quarter of 2017, the company’s biggest region by geography.

The FirstNet contract, which was awarded to AT&T and where Nokia won an important role, represents a key opportunity, even if it’s ramping slowly over the course of this year, Suri said.

“Mobile Networks was clearly the highlight of the quarter,” he said in prepared comments. “A combination of robust market interest in our advanced LTE solutions, including closing the quarter with 145 4.5G customers, and ongoing cost discipline allowed us to get closer to stabilizing our topline while delivering improved profitability.”

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Nokia’s 6% year-on-year net sales decrease in the first quarter was primarily due to IP/Optical Networks and Fixed Networks, with mostly flat net sales in Mobile Networks and Applications and Analytics.

Overall, Suri said he is pleased with the progress the company is making.

“We know we have some challenges” in select business groups, and the company is focusing on addressing those issues he said. With the acquisition and integration of Alcatel-Lucent behind it, Suri said the company is committed to making 2017 a year of execution.  

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Both Nokia and rival Ericsson are going through tough times, with Ericsson reporting a first-quarter loss of about $1.4 billion as operators cut spending and rival vendors from China step up their game. But last year, Suri described Ericsson as being in “crisis” mode, something that is far from Nokia’s predicament, he said.  

Borje Ekholm took the chief executive reins at Ericsson in January, replacing Hans Vestberg, who has since joined Verizon as executive vice president for the Network and Technology team.

Nokia shares were trading at $5.66 at mid-day Eastern time today, up about 5.29%.