Nokia (NYSE:NOK) reported higher profit than expected in the fourth quarter, and grew its sales as well thanks in large part to a surge in revenue from its Network business, particularly in North America.
Overall, Nokia posted net profit of around $500 million (€443 million), beating a median analyst forecast of around $369 million, according to the Wall Street Journal. In the year-ago period Nokia reported a net loss of around $29.5 million because of weakness in its handset unit, which it has since sold to Microsoft (NASDAQ: MSFT).
Total sales for Nokia jumped 9.4 percent to around $4.32 billion in the fourth quarter, beating the average analyst estimate of $4.25 billion, according to Bloomberg. Nokia's Networks unit made up 88.5 percent of the company's total sales in the quarter,
Sales in the Networks business grew 8 percent year-over-year, but jumped an astounding 95 percent in North America. Every other geographic region either lost sales or grew by a miniscule margin on a year-over-year basis. Nokia said it booming business in North America was "primarily due to LTE network deployments at major customers."
In the U.S., Nokia, Alcatel-Lucent (NYSE: ALU) and Samsung are providing 8T8R radios for Sprint's (NYSE: S) tri-band Spark LTE service. Nokia is also helping T-Mobile US (NYSE:TMUS) enhance its LTE network and implement carrier aggregation as well as expand LTE network coverage and upgrade its 2G network to LTE. T-Mobile expects to cover 285 million POPs with LTE by mid-year and 300 million by year-end.
Nokia reiterated that it expects operating margins for the Networks division to recede this year to its long-term target range of 8 to 11 percent, a decline from the 12.2 percent it reported in 2014.
"Last year was exceptionally good for Networks but the company did not provide any support for this to be the case this year," Nordea analyst Sami Sarkamies told Reuters.
Nokia's Technologies unit, which houses its patents, brand licensing and new product design businesses, reported an quarterly operating profit of around $87.5 million, well below forecasts, according to Reuters.
That was partly due to the cost of developing the Nokia N1 Android tablet, the company's first brand-licensed device since it offloaded the devices business. The gadget was which was launched in November and is designed to compete with Apple's (NASDAQ: AAPL) iPad Mini and other small tablets.
Special Report: Wireless in the fourth quarter of 2014
Nokia licenses brand and IP for Foxconn-made N1 Android tablet
Nokia expects sales and margin growth from key Networks unit in 2015
Nokia Networks sees N. American sales boom 58% in Q3 thanks to Sprint, T-Mobile
Nokia Networks establishes multi-stakeholder ETSI ISG for mobile edge computing
Nokia Networks signs $970M TD-LTE deal with China Mobile
Nokia Networks' Moiin on the pillars of 5G and the likelihood of a new air interface