Nokia profits surge after Apple deal and network gains

By Jussi Rosendahl

HELSINKI (Reuters) – Network equipment maker Nokia reported a jump in profit on Thursday thanks to a patent deal with Apple and gains in market share though it warned the network business could slow by more than expected this year.

Nokia’s shares rose 5.5 percent by 0820 GMT after it posted second-quarter operating profit of 574 million euros ($674 million), up 73 percent from a year ago and well above analysts’ average forecast of 447 million euros in a Reuters poll.

“We are actually taking some share in the market … early signs look quite promising in terms of market share development,” Nokia Chief Executive Rajeev Suri told a conference call.

Telecom equipment suppliers have struggled in recent years amid weak demand from telecom companies, but Nokia said it had won markets thanks to its broader product portfolio following its 2016 acquisition of rival Alcatel-Lucent.

Nokia’s profit growth is in stark contrast to loss-making Swedish rival Ericsson, which stunned investors this year by announcing $1.7 billion in provisions, writedowns and restructuring costs.

Demand for the current generation of faster 4G mobile broadband equipment has peaked, so equipment vendors are now waiting for telecoms firms to upgrade to next-generation 5G equipment, which Suri said would become “meaningful” in 2019.

Nokia bought Alcatel-Lucent in a $15.6 billion deal which gave it a larger fixed-line network business and made it less dependent on mobile broadband. The deal also helped it launch new router products aimed at internet giants.

Another major rival, China’s Huawei, which is also a major phone manufacturer, reported a 15 percent rise in its half-year sales on Thursday, but it did not break down profits for its networks business.

Huawei has previously signaled it would scale back its aggressive price competition to strengthen overall profits.

CHALLENGING MARKET

Nokia echoed Ericsson’s recent remarks by saying the network market would be more challenging in the full…

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