Nokia Corp. (NOK) reported second-quarter 2014 financial results wherein the bottom line surpassed the Zacks Consensus Estimate, while the top line slightly missed the same. In Apr 2014, Nokia sold its struggling mobile phone business to Microsoft Corp. (MSFT). Post the divestiture, the company’s Network division has become its core growth area.
Nokia’s Network division has also been facing a secular decline in sales and margins. However, in the reported quarter, this business got a fillip especially from gradual deployment of 4G LTE network in China.
Meanwhile, China Mobile Ltd. (CHL) and China Telecom Corp. Ltd. (CHA) have become major growth driver for the company. Nokia currently carries a Zacks Rank #3 (Hold).
Quarterly net loss from continuing operations came in at approximately $35.7 million or a loss of 1 cent per share compared with a net loss of $155 million or 3 cents per share in the prior-year quarter. However, quarterly adjusted (excluding special items) earnings per share of 8 cents were better than the Zacks Consensus Estimate of 7 cents.
On the other hand, quarterly net revenue stood at approximately $4,035 million, reflecting a year-over-year fall of 6.8% and also lagged the Zacks Consensus Estimate of $4,070 million.
Quarterly adjusted gross margin was 44% in second-quarter 2014 compared with 43.3% in the prior-year quarter. Adjusted operating margin, in the reported quarter, was 11.8% as against 13.6% in the year-ago quarter.
At the end of the first half of 2014, Nokia had approximately $8,915 million of net cash and marketable securities compared with $3,185 million at the end of 2013.
Nokia Networks Segment
Total revenue was approximately $3,519 million in the second-quarter 2014, down 7.7% year over year. Quarterly adjusted operating profit was approximately $385 million, down 14.3% year over year. EBITDA (earnings before interest, depreciation and amortization) was about $346 million, down 16.8% year over year.
HERE Segment
Quarterly total revenue was approximately $320 million, flat year over year. Quarterly adjusted operating profit was nil against $11 million in the prior-year quarter. EBITDA was about $17.8 million, down 45.8% year over year.
Nokia Technologies Segment
Quarterly total revenue came in at approximately $202 million, up 1.4% year over year. Quarterly adjusted operating profit was approximately $132 million, up 6.7% year over year. EBITDA was also come in around $132 million, up 6.7% year over year.
Outlook
For fiscal 2014, adjusted operating margin for the Nokia Networks segment is projected at or slightly above the high end of its target range of 5 -10%.
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