Nokia reveals how it would have looked if devices unit never existed
Nokia's next earnings report will be the first time it will exclude revenues from its devices and services business, and the first time it discloses the financial outlook for its new intellectual property related Advanced Technologies business.
For those wanting to get an idea of the financial health of 'new Nokia' from those results, the company has released a primer on how the company would have looked like over the past two years had it not been operating its devices and services business, which is expected to transfer to Microsoft this quarter. The primer is intended to give Nokia-watchers an idea of how the company is doing on a like-for-like basis, showing how recent results would look with its handset business stripped out.
So, on Thursday when Nokia releases its Q4 2013 results, it will report the financials its three remaining businesses — Nokia Solutions and Networks (NSN), HERE and Advanced Technologies — in four segments: mobile broadband and global services within NSN, Here, and Advanced Technologies.
Nokia will provide separate information for its devices business under the banner of discontinued operations, and details on the unit were not included in today's release.
Under the new reporting structure, Nokia has for the first time detailed what its Advanced Technologies unit — handling new technology R&D and intellectual property revenue — would have looked like had it always run as a single unit. Previously Nokia included its income from the businesses that will make up Advanced Technologies within its general devices and services numbers, but estimated that its annual run-rate for IPR income was around €500m.
In 2012 though, it would have earned €534m and, with operating costs and expenses running to €206m, made a profit of €325m.
Nokia's Here business lost €301m off €1.1bn in net sales over the same period. The two new categories within NSN, mobile broadband and global services, would have been contributed €490m and €334m in net sales respectively, but NSN as a whole would have made a €795m loss.
For the first three quarters of 2013, Advanced Technologies has earned €409m in net sales, according to Nokia, making it the most lucrative of its remaining businesses, based on profits as a share of net sales. For example, in Q3 2013, the unit's €83m operating profit was 59 percent of net sales of €140m, compared to NSN, whose operating profit for the quarter of €166m was six percent of €2.5bn in net sales.
In future, Nokia's biggest business by revenue will be NSN, which for the past couple of years has accounted for around a half of overall revenues.