Nokia reported better-than-expected quarterly results on Thursday, but warned that increased competition will probably hurt profits in 2015.
Net income for the fourth quarter stood at €443 million, or €0.11 a share, compared to a loss of €26 million a year earlier. In comparison analysts had projected net income of €325 million, or €0.09 a share.
Finland’s Nokia agreed to sell its smartphone business to Microsoft last year, following three years of losses with a joint value of more than €5 billion. Nokia was facing heavy pressure from rivals Apple and Samsung, leading to the companys losses and eventually the sale.
However, the reported net income figures mark the second straight quarter when Nokia is above the red zone. Nokia boosted its dividend payout to €0.14 per share from €0.11 in 2013, but the proposed annual growth was below expectations.
Nokia reported a revenue of €3.80 billion for the quarter, up 9.2% compared to the same period in 2013 and also up from projections of €3.74 billion. The company said it reached sales of €514 million from €263 million from its North American operations, boosted by an agreement with Spring, the third-largest US wireless operator.
The company also saw a modest improvement in sales in Europe, with a 4% year-on year increase, and in China, where sales jumped 16%.
Operating profit from the companys network-equipment unit, the third-largest in the world, climbed to €470 million in the quarter from the €397 million reported in 2013. The unit, which became the companys core business after the sale of its mobile division, accounted for 14% of all sales.
In comparison analysts polled by Reuters had projected €415 million in sales for the unit. Additionally, Nokia said revenue and margins will drop quarter-on-quarter in the division and projected long-term margins to range between 8% and 11%, down compared to the 12.2% stated in 2014.
Meanwhile, the companys technology division reported a 2% fall in revenue to €149 million. Margin fell to 51.7% during the last three months of last year compared to 66.9% in 2013.
“While 2014 was a year of reinvention, we see 2015 as a year of execution. As we pursue … opportunities, we will not shy away from investing where we need to invest,” said Chief Executive Rajeev Suri.
Nokia gained 1.13% on Wednesday and closed at €7.15 in Helsinki. On Thursday the stock fell 2.31% to 6.99 at 13:55 GMT, marking a one-year increase of 40.09%. The company is valued at €26.66 billion.
According to the Financial Times, 31 analysts offering 12-month price targets for Nokia have a median target of €6.50, with a high estimate of €9.00 and a low estimate of €4.70. The median estimate represents a 9.09% decrease from the last close price.
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