Last week, Nokia reported 2018Q2 results last week. They struggled yet another quarter, with slowing sales in the networks segment causing a steep decline in the bottom line. Barely had the results sunk in, when Nokia announced they had won a multi-year, $5 billion sale of 5G gear to T-Mobile.
Financial results included net sales in Q2 2018 were EUR 5.3bn, compared to EUR 5.6bn in Q2 2017. On a constant currency basis, net sales would have been down 1%. Non-IFRS diluted EPS in Q2 2018 was EUR 0.03, compared to EUR 0.08 in Q2 2017. Reported diluted EPS in Q2 2018 was negative EUR 0.05, compared to negative EUR 0.07 in Q2 2017.
In spite of the disappointing results, Nokia reiterated full year 2018 Nokia-level guidance and remains on target to deliver EUR 1.2 billion of recurring annual cost savings in full year 2018.
Rajeev Suri, President and CEO said: Nokia’s Q2 2018 results were consistent with our view that the first half of the year would be weak followed by an increasingly robust second half. Pleasingly, I am able to confirm that we expect to deliver 2018 results within the ranges of our annual guidance.
This week, those financial results were followed by a T-Mobile and Nokia landmark announcement: a $3.5 billion agreement to accelerate the deployment of a nationwide 5G network. Nokia will provide T-Mobile with its complete end-to-end 5G technology, software and services portfolio, assisting the Un-carrier in its efforts to bring its 5G network to market for customers in the critical first years of the 5G cycle.
“We are all in on 5G,” said Neville Ray, Chief Technology Officer at T-Mobile. “Every dollar we spend is a 5G dollar, and our agreement with Nokia underscores the kind of investment we’re making to bring customers a mobile, nationwide 5G network. And together with Sprint, we’ll be able to do So. Much. More.”
For those hoping this was bonus good news beyond the just issued guidance, Nokia reported that the outlook provided in the Financial Report for Q2 and Half Year 2018 issued on July 26, 2018 fully included the expected impact of the agreement with T-Mobile announced, and thus is not affected by the announcement. Well, at least we have more confidence that the guidance is achievable.
For details on Nokia’s results, see https://www.nokia.com/en_int/news/releases/2018/07/26/nokia-corporation-financial-report-for-q2-and-half-year-2018
For more information on the Nokia/T-Mobile announcement see http://investor.t-mobile.com/file/Index?KeyFile=394414122 and https://www.nokia.com/en_int/news/releases/2018/07/30/t-mobile-and-nokia-ink-35-billion-multi-year-5g-network-agreement
For previous Nokia financial coverage, see http://www.truepulse.com/nokia-tops-2016q4-profits-expectations/