Nokia Reports Surprise Q1 Loss, Sees Pressure In Second Half

Nokia reported a surprise quarterly loss on Thursday, citing hard competition in its core networks business.

“The slow start to 2019 and expected weak overall first half puts significant pressure on execution in the second half,” the company said in a statement.

Having signaled back in January “a particularly weak Q1”, Nokia reported a fall to an operating loss (non-IFRS) of 59 million euros ($66 million) from a profit of 239 million euros in the first quarter a year ago.

That compared with analysts’ profit expectations ranging from 175 million euros to 457 million in a Reuters poll.

Nokia repeated its January forecasts for “flattish” market in 2019, and for its 2019 earnings per share of 0.25-0.29 euros, and 2020 EPS of 0.37-0.42 euros.

The networks industry – dominated by Nokia, Sweden’s Ericsson and China’s Huawei – has been battered by years of slowing demand since 4G network sales peaked in the middle of the decade.

It is now readying for a new cycle of network upgrades as operators have started to invest in 5G equipment.

Last week rival Ericsson posted January-March quarter profit that swept past forecasts due to strong growth in North America and cost cuts, spurring the Swedish firm to lift its outlook for the global telecom networks market.

Some analysts say Nokia and Ericsson might benefit from challenges faced by Huawei after Washington alleged its equipment could be used by Beijing for spying, but Nokia warned the competition could be harsh.

“Competitive intensity could increase in some accounts as some competitors seek to take share in the early phases of 5G,” Nokia said.―CNBC