Nokia, today, announced their quarterly earnings for the final quarter of 2016 and announced that they raked in about €6.6 billion in net sales during the three month period ending December 31st, 2016. That’s down from €7.7 billion in the same period of time a year earlier. For the full year, net sales totaled just under €24 billion, and that’s down from €26.6 billion in the year before. Gross profit for the quarter was €2.8 billion versus €3.2 billion in the same quarter a year earlier. Their profit margin slipped from 42.4% in the fourth quarter of 2015, to 42% in the fourth quarter of 2016. Nokia missed analysts estimates with these earnings and they attribute that to cutting costs as well as merging with Alcatel-Lucent in 2016.
After the acquisition of Alcatel-Lucent, Nokia has been cutting thousands of jobs in an effort to save about €1.2 billion in annual costs by 2018. Nokia has also begun to struggle in recent quarters due to the fact that the need for telecom equipment just isn’t there anymore. With many carriers having bought all they need for their 4G LTE networks at this point, and 5G networks still being a few years off, there’s not many sales being made. This isn’t affecting just Nokia either, as direct competitors Huawei and Ericsson are having the same problem. Nokia is expecting to see the market drop by about 2% this year, they are seeing opportunities in Japan, India and North America to help keep them afloat until the age of 5G is present.
Nokia remains one of the largest telecom hardware providers in the world. Between Nokia and Ericsson, most of the hardware on towers in the US and most other countries, are made from these companies. Huawei has been growing quite a bit, but they still aren’t that big in North America, and that’s mostly the Chinese government’s fault. However, they are very popular in Asia, and these three definitely compete pretty hard for their carrier customers. While Nokia the smartphone company is being reincarnated, the telecom side of things is still going strong, even after purchasing Alcatel-Lucent, and while they didn’t put up the best earnings in the fourth quarter, they are staying afloat. And once 5G really gets started, they’ll likely put out some record-breaking numbers.