Nokia has announced its results for the first quarter of 2014. It said that the company would have had net cash of €7.1 billion if the sale to Microsoft had closed before the end of the quarter. Instead the company now has cash balance of €2.1 billion. It reported operating profitability for Nokia’s continuing operations increased to €304 million, 11.4% of net sales, compared to €254 million or 8.1% of net sales in Q1 2013.
The company recently announced former networking unit head Rajeev Suri, as president and CEO after sale of Nokia’s devices business to Microsoft. In the results the company has referred to the former devices division as ‘discontinue operations’.
Devices business – discontinued operations
– In the quarter, Nokia announced affordable devices running on a version of Android, that comes with Microsoft services and signature Nokia experiences.
– Nokia’s facility in India will remain with the company following the closing of the transaction. Nokia and Microsoft have entered into a service agreement whereby Nokia would produce mobile devices for Microsoft for a limited time.
– In Korea, Nokia and Microsoft agreed to exclude the Masan facility from the scope of the transaction and Nokia is taking steps to close the facility, which employs approximately 200 people.
– The company did not disclose the actual number of devices it sold in the quarter.
The company reported net sales of €1.9 billion, down 30% Year-on-Year (YoY) and 27% sequentially. Sales declined due to lower mobile phone sales and intense competition at the low-end of the portfolio.
Unit volumes declined in the first quarter 2014 on both YoY and QoQ basis. The YoY decline in volumes was attributed to lower mobilephones unit volumes, partially offset by higher smart devices unit volumes.
Average sale price of devices declined both YoY and sequentially for both smartphones and mobile phones
– In the first quarter 2014, HERE had sold 2.8 million vehicle licenses, compared to 2.2 million units in the first quarter 2013 and 3.2 million units in the fourth quarter 2013. On a YoY basis, unit sales to vehicle customers increased primarily due to higher consumer uptake of in-vehicle navigation and higher vehicle sales. On a sequential basis, unit sales to vehicle customers decreased primarily due to lower seasonal vehicle sales.
– Sales to vehicle customers accounted over 50% of external HERE sales in the first quarter.
– HERE launched HERE Maps experience for offline maps and turn by turn navigation.
– App launched for Nokia X devices, Windows 8.1 devices
– Here SDK launched so businesses can be build native location-based apps
– Opened up community map editor, now available in over 100 countries
– Contract with Garmin for HERE Traffic extended by 3 years
– HERE Traffic was selected to provide the Missouri Department of Transportation with real-time traffic data.
– Launched real time traffic service to Mitsubishi vehicles in North America, Europe and Russia
– QNX Systems will add support for HERE Auto
– Volvo launched navigation platform powered by HERE
– Yahoo! Full venue maps powered by HERE
Net sales of HERE division was €209 million, down 3% YoY and 18% from the previous quarter. External net sales accounted for €185 million, an increase of 13% YoY, but it declined 18% from 225 million in the previous quarter. Internal net sales was at €24 million, down by 54% YoY and 20% QoQ. HERE internal sales refers to sales made to Nokia’s Devices & Services business that it sold to Microsoft.
Microsoft will become a strategic licensee of the HERE platform, and will separately pay HERE for a four-year license that will be recognized as external net sales.
– Networks was granted a five-year contract with Vodafone for the SingleRAN and Subscriber Data Management solutions in the operator’s Project Spring network upgrade and was selected by Everything Everywhere in the UK to support the continued expansion of its LTE network.
– Networks was also selected as the sole supplier of Elisa’s LTE network in Finland. Other contracts in the quarter included VimpelCom’s LTE radio access networks in the central region of Russia, Siberia, South and most of the Volga and Ural regions; the implementation of an LTE network and modernization of the existing GSM and 3G networks for TELE Greenland; the implementation of Taiwan Mobile’s multi-band LTE and LTE-Advanced network; the upgrade of Telkomsel’s GSM and 3G HSPA+ network in Indonesia; the modernization and expansion of Mobily’s 2G, 3G WCDMA and TD-LTE networks in Saudi Arabia; and LTE infrastructure for Avantel in Colombia.
At the end of the first quarter of 2014, Networks had 138 commercial LTE contracts.
The Networks business had net sales of €2.3 billion, down 17% YoY and 25% sequentially driven by lower net sales in Global Services and the divestments of businesses not consistent with its strategic focus.
Net Sales dropped in North America by 38% and by 30% in Middle East, by 28% in Latin America and by 14% in Europe 14% Y0Y. Asia Pacific sales reduced the least with 12% YoY.
The company attributed the 25% decrease in Networks net sales in the first quarter 2014 to seasonal decrease in sales in both Global Services and Mobile Broadband.
The decrease in Mobile Broadband net sales was driven by decline in legacy radio technologies. On a regional basis, Networks’ net sales decreased sequentially primarily due to Greater China, Middle East & Africa, Asia Pacific and Latin America.
The company entered in to a patent sharing agreement with HTC. Nokia will receive payments from HTC and will also have access to HTC’s 4G patents.
Net sales from technology division was at €131 million, up 7% YoY and 8% sequentially.