Michael Vilenius: Poor, but still good for Nokia – Dagens Industri

Updated 2016-05-10 11:38. Published 2016-05-10 11:37

Finnish Nokia, newlywed with French- US Alcatel-Lucent had themselves flagged for it, the American ip competitor Juniper warned and Ericsson’s report confirmed it – that it would be tough and go slow for Nokia in the first three months. That did it for mobilsystem- and IP networking giant. And it did it in a way that is likely to be a theme in future when Nokia threading itself increasingly dense with Alcatel-Lucent. It looks like this:

* Worse sales. Start quarter sales declined 9 percent to 55 billion, 3 percent less than analysts had expected before. Nokia sees continued weak market in front of him and reiterated that the world’s mobile market will shrink in 2016 and be unchanged at Nokia’s markets.

* Better margins and results. Operating profit, Nokia and the market chooses to looked at that restructuring costs and goodwill impairment losses have been excluded, was 3.4 billion, 25 percent higher than last year and 7 percent above market expectations.

* Nokia raised expectations on their synergies from the merger with Alcatel-Lucent from round to over EUR 900 million or SEK 8.8 billion.

Everything goes completely in line with the Nokia’s CEO, Delhi-son Rajeev Suri, and finally in 2009 the one to stop the flow of blood to the merger between Nokia and Siemens mobile businesses usually do. The main competitors Ericsson and Huawei sure hope that Nokia will lose momentum when the company is once again entered a new integration process. But they need to watch out what business they are trying to take. In addition to cutting hard in the workforce, are now 10,000 to 15,000, or one-seventh of Nokia’s employees and strict cost control, he has managed to get the organization to cherry pick, focusing hard on price and opt out of the unprofitable nearest shops. The improvement potential is great. Nokia has a long way to Ericsson’s profitability if we are comparing apples and apples for the first quarter.

Gross margin, unadjusted: Nokia 28.3 percent and Ericsson 33.3 percent.

Operating margin excluding restructuring costs and goodwill impairment: Nokia and Ericsson 6.2 percent to 9.2 percent.

Confidence in Nokia is just as Ericsson low despite big savings initiatives. The stock has with Tuesday’s cases has been reduced by 25 percent this year. We use analysts’ forecasts for 2018 since the savings and integration of the Nokia and Alcatel-Lucent will be in port they think of SEK 27.6 billion in operating income. The gain values ​​the exchange at 6.5 times adjusted for the company’s 77 billion large net cash position. It breathes crisis industry, but also a good chance to surprise positively.