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A flat start for Nokia's life without handsets - but coffers buoyed by Microsoft nonetheless

The first set of results since selling its devices and services business to Microsoft show new CEO Rajeev Suri is keeping things on a very even keel.
Written by Jo Best, Contributor on

Nokia has turned its first set of results since selling its handset business to Microsoft and, while they're largely flat, Microsoft figures heavily in both Nokia's past and present.

According to its second quarter results released on Thursday, Nokia generated revenue of €2.94bn, down around seven percent on the €3.16bn for the same quarter last year. The company made €284m of operating profit over the second quarter, a noticeable jump on a year ago, when the bottom line showed a €12m profit. The figures exclude the now-sold handset business, and purely cover Nokia's ongoing businesses.

If currency fluctuations were ironed out, the drop in revenue would have been more like two percent, Nokia added, and with the proceeds from the Microsoft sale added to its bottom line, the quarter showed a healthy profit of €2.51bn overall.

Nokia Networks, the largest of the three businesses that form Nokia after the sale of its devices unit, showed revenue falling eight percent year on year to €2.6bn, and operating profit down 14 percent to €281m.

The drop came as a result of lower sales by its Global Services business, as well as selling off of businesses "not consistent with its strategic focus" and pulling out of  particular contracts and countries. 

The company remains upbeat about the unit's prospects for the rest of the year however, saying its expects sales to rise in the second half, citing factors including an increase in new network rollout projects, particularly around TD-LTE in China, and better operational efficiency at the company.

Year on year, Nokia's mapping business Here held steady on revenue, turning in €232m, just €1m less than last year, though profit fell by €8m to break even for the unit. 

Quarter on quarter, Here's revenue was up around 10 percent, which Nokia said "was primarily due to Microsoft becoming a more significant intellectual property licensee in conjunction with the sale of substantially all of the Devices & Services business to Microsoft". The increase from Microsoft helped to counter lower sales to sat-nav providers and a drop in revenue related to smartphones sales from the old Nokia handset business. However, sales to vehicle makers are on the up, it said: it sold 3.3 million licences to car companies, compared to 2.7 million a quarter ago.

Nokia Technologies, its R&D and IP business, was the only unit to increase both revenue and operating profit: the former rose €2m year on year to €147m, and profit was up by €6m to €96m. Again, Nokia has Microsoft to thank here: it said the jump is down to Microsoft becoming a "more significant intellectual property licensee", though new deals with other licensees also helped. 

Nokia is predicting the unit will bring in €600m over the year, in line with previous predictions.

Over the quarter, Nokia also saw its a cash injection of €4.8bn thanks to the sale of the devices and services business to Microsoft, which closed in late April.

While Nokia did not disclose how many devices it sold between the start of the quarter and the deal closing, it reported revenue of €497m, an operating loss of around €116m for the period. Over the remainder of the quarter, Microsoft sold 5.8 million Lumia devices and around 30.3 million feature phones.

Shortly after the sale, Nokia appointed Rajeev Suri, then head of its networks business, as CEO. It also made a number of acquisitions over the period, including Mesaplexx, Medio, and SAC Wireless.

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