Tencent Technology News according to foreign media reports, network equipment supplier Nokia announced on Thursday that its profit in the second quarter increased by 73% compared with the same period last year, mainly due to its patent cooperation with Apple Inc and its increased market share.
Nokia's operating profit rose to 574 million euros ($674 million) in the second quarter, up 73% from a year earlier, far exceeding the average analyst estimate of $447 million, according to Reuters. Nokia's shares rose 5.5 per cent at 08:20 GMT after the results were announced.
"We actually gained some market share. There are early signs that our market share has a good prospect. " Nokia CEO Rajiv Rajeev Suri said on the earnings call.
In recent years, the development of telecom equipment suppliers has been very difficult, because the market demand is very weak. But Nokia said it was able to win the market because it broadened its product range after acquiring rival Alcatel Lucent in 2016.
Nokia's profit growth contrasts sharply with the losses of Swedish rival Ericsson. Ericsson surprised investors this year when it announced $1.7 billion in reserves, writedowns and restructuring costs.
The market demand for 4G mobile broadband devices is now at its peak, so equipment suppliers are waiting for telecom companies to upgrade to 5G devices. Suri said it may not be until 2019 before the initial results can be seen.
Nokia bought Alcatel-Lucent for $15.6 billion. The deal gives Nokia a larger fixed-network business, reduces its reliance on mobile broadband, and helps it launch new router products for Internet giants.
Huawei, Nokia's other main competitor, reported on Thursday that its revenue grew by 15% in the first half. However, it does not provide a breakdown of the profit figures of its network business.
A challenging market
Nokia said that throughout the year, the network equipment market will face more challenges than previously expected. Ericsson recently made similar remarks.
"We expect the market to decline by 3-5%, which is higher than we previously expected." Suri said. Nokia's Internet business accounts for nearly 90% of its total sales, so it will decline in 2017 with the trend of the market. However, Nokia reiterated that its network business's operating profit is expected to grow by 8-10% for the full year.
"the whole market is very weak. However, Nokia's profitability proves that they can deliver good results in a weak market. " Said Mikael Rautanen, an analyst at Inderes, a market research firm. He gave Nokia shares an "overweight" rating.
In the second quarter, Nokia's online sales fell 5% from a year earlier. However, total business sales fell only 1% year-on-year to 5.63 billion euros. This is mainly due to the settlement of the patent dispute between Nokia and Apple Inc and the signing of a new patent licensing and business cooperation agreement.
Suri said Nokia was prepared to expand its R & D spending because he found that the 5G market was larger than the company thought last year.
"We believe that the 5G market will last longer and have a more far-reaching impact than we thought." "5G network testing will accelerate in 2018 and 2019," Suri said. We are expected to see large-scale deployment of 5G networks in markets such as the United States, China and Japan. "
Nokia was once the world's largest mobile phone maker, but its business was crippled by the rise of smartphones, and it had to sell its mobile phone business to Microsoft Corp in 2014, leaving only its network business and a series of technology patents. (compiling / happy learning)