Nokia Q4 boosted by license fee, 2018 outlook bleak

On a constant currency basis, sales increased 5 percent, with 2 percent growth in Nokia's Networks business and 80 percent growth in the licensing business, Nokia Technologies. Operating profit from the networks business fell 25 percent year-on-year. Rajeev Suri, CEO of Nokia, said profit declines are expected to continue during 2018, unless operators in North America decide to spend, which could soften the situation.

Nokia is a company which is known to everyone through smartphones. The latest-quarter result was adversely affected by approximately 0.13 euros per share due to re-measurement of deferred tax assets following the change in tax rates, primarily in the United States.

For 2019 and 2020, the company expects market conditions "to improve markedly", driven by full-scale roll-outs of 5G networks.

For the full-year 2020, the company expects earnings per share of 0.37 euros to 0.42 euros, strongly positive free cash flow, and a group-level, non-IFRS operating margin in the range of 12-16%. "Estimates for just one year are hard, doing it for three years is quite bold", an analyst at Inderes Equity Research, Mikael Rautanen, said.

Telecom network gear maker, Nokia, posted better-than-expected quarterly profits yesterday and forecast a recovery in profits by 2020, encouraging investors spooked a year ago by a weakening equipment market and acquisition integration missteps.

What made the 9% increase a reality was the multi-year patent license agreement, signed between the Finnish company and another network Goliath - Huawei, which brought in $260,4 million, with more revenue expected during the term of the contract.

Analysts noted that ahead of any 5G rebound, Nokia will also be helped by its patent licensing business where it expects sales to grow around 10 percent through 2020. Nokia made a 2.6-billion-euro profit, 19 percent higher than the 2.2 billion euros in 2016.

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