As Nokia transitions into a company that no longer makes handsets, it anticipates greater profitability going forward, noting its three now-core units are solid.
However, the unit it has spun off to Microsoft - devices and services - weighed on its overall profitability for the first three months of the year, dropping reported earnings per share to EUR0.06 from EUR0.01 in the preceding quarter, although this was an improvement year-on-year.
Microsoft announced the unsurprising move to buy Nokia's device unit, for EUR5.44 billion, last September. The deal has been through several regulatory hurdles around the globe, including gaining local Competition Tribunal approval before coming into effect last Friday.
The unit that Nokia sold to Microsoft did not have a good quarter, with sales dropping 30% and its operating loss climbing to EUR326 million, from EUR120 million, year-on-year. Nokia will gain EUR3 billion on the sale, of which EUR1 billion is taxable income in its home country, Finland.
Solid start
Chairman Risto Siilasmaa says the group is entering a "new era" post the deal.
"We are confident in our future. Nokia's vision is to be a leader in technologies, which will be important in a world of billions of intelligent connected devices. With our strategic direction now set, our highly-talented teams can focus fully on realising our vision by building on Nokia's three strong businesses - networks, Here and technologies."
Siilasmaa adds the company has a solid foundation and all three of these units delivered a "solid" performance in the first quarter. Nokia grew underlying operating profit from continuing operations to EUR304 million from EUR254 million year-on-year, despite revenue dropping 15%, to EUR2.7 billion.
In its commentary, the company notes underlying operating profitability in its networks unit was "solid" as it improved its gross margin. Here, its mapping technology, grew external sales 13% year-on-year, to EUR185 million.
Nokia ended the quarter with net cash of EUR2.1 billion, and gross cash of EUR6.9 billion, which was a decline over its expected position, had the deal to sell its device unit to Microsoft wrapped up before the end of the quarter. The company says the deal would have boosted its net cash to EUR7.1 billion, and gross cash to EUR10.5 billion.
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