The brand new Nokia logo displayed on a cell phone with the Nokia logo on the screen.
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Finnish telecommunications giant nokia posted a quarterly operating profit on Thursday that was below market expectations.
The corporate reported an operating profit of €479 million ($524.94 million) in the primary quarter, up from €583 million in the identical period last yr.
This figure was also below the forecast of analysts surveyed by Refinitiv at EUR 532.4 million.
Nokia said its comparable gross margin was also down 300 basis points to 37.7% from 40.7%.
This was as a result of “a regional mix and a lower contribution from Nokia Technologies, partly related to the licensing option exercised within the fourth quarter of 2022,” Nokia said in an announcement.
Nokia increased net sales by 10% to €5.86 billion, higher than the €5.72 billion estimated by analysts.
“We’ve seen a shift in our regional structure. We had a slowdown in North America, but we had really strong growth in India,” Pekka Lundmark, CEO of Nokia, told CNBC.
Nokia shares fell sharply on news of Nokia’s financial report, falling nearly 10% as of Thursday afternoon.
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Referring to the negative stock price response, Lundmark said this reflects disillusionment in its technology licensing business and a changing regional revenue mix.
This a part of the business had an annual execution pace of €1 billion, which was below Nokia’s goal of €1.4 to €1.5 billion.
“The network infrastructure and mobile network firms are doing well, so we’re really talking in regards to the tech licensing business where we’re near [a] significant take care of Samsung in the primary quarter,” Lundmark told CNBC’s “Squawk Box Europe”.
“We’re in litigation with [Chinese smartphone makers] Oppo and Vivo.
In keeping with Lundmark, Nokia has seen a slowdown in its North American business.
“There’s been a big depletion in North America because investment was really high last yr,” said Lundmark.
“Our customers have been constructing stocks, unsure if we’ll have the opportunity to produce them as a result of component shortages, and now they’re using up a few of that stock.”
Despite this, Nokia in India saw significant growth due to strong sales of 5G equipment.
“We had really strong growth in India,” said Lundmark. “India accounted for 15% of our sales in the primary quarter, in comparison with only 5% last yr.