Nokia Reports Q1 2018 Decline, Banking On Near-Term 5G Boost

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Nokia Corporation on Thursday published its consolidated financial report for the first quarter of the year, having revealed an overall performance decline spanning most of its businesses which was largely expected given its recent results. The company's Q1 sales amounted to the equivalent of $5.97 billion, over $700 million less compared to the same period less year, though Nokia is pointing to its revenue being flat on a hypothetical constant currency basis. Operating profit was over $291 million, 30-percent down year on year, with both declines being attributed to slowing net sales in North America.

The Espoo, Finland-based tech giant described its order backlog and intake as "excellent," stating it's still forecasting a solid year overall, largely due to the advent of 5G. Nokia is expected to be one of the largest contributors to the commercialization of the fifth generation of mobile networks, especially in the United States where some of its largest rivals from China — Huawei and ZTE — are effectively blocked from doing business on any significant scale. As commercial 5G buildouts in the U.S. are set to begin in the second half of 2018, Nokia's sales are expected to pick up over the same period, the company predicts. The firm is also continuing to diversify, with a third of its revenue now amounting to products and services from multiple business units. Until 5G provides the company with the performance boost it's been waiting for years now, ever since it started making major investments in the incoming networking technologies, its reliance on licensing is growing, with related revenue being up 65-percent on an annual basis, largely thanks to its smartphone partnership with HMD Global that's been delivering Nokia-branded handsets since early 2017.

Outside of mobile devices, Nokia is now also targeting new licensing opportunities in the automotive segment and may do the same regarding digital health. While its wearable and smart scale business is now under a corporate review, with recent reports indicating Nokia is in the market for a buyer, its latest financials made no direct reference to that division. Should its digital health business end up being sold, the divestment would likely mimic its smartphone exit, i.e. see the firm license out the rights to its name instead of outright offloading the entirety of the unit.

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