Despite 36 Commercial 5G Deals Nokia Posts Huge Loss In Q1

Finnish telecom gear maker Nokia reported a significant loss in its Q1 financial results. The firm reported loss 55 million Euro in Q1, 2019 as against 239 million Euro profit for the same period a year ago. The company reported 5 billion Euro in revenue for Q1 as against 4.9 billion Euro for the same period a year back.

And this is not the only bad news. The company, looking at the current market dynamics, yet-to-be-matured 5G ecosystem, expects the next quarter as well as the full year 201 to be ‘flattish’.

“The slow start to 2019 and expected weak overall first half puts significant pressure on execution in the second half,” the company said in a statement.

Nokia also attributed its Q1 loss to the 200 million Euro it could not recognise related to 5G deliveries mainly in North America, which it expects to recognize in full before the end of 2019. It said it could not pocket that money as the 5G ecosystem is still evolving.

The company suffered the maximum loss in its strongest business unit – networks, where it suffered a loss of 254 million Euro in this quarter as against 46 million Euro profit a year back.

This is in sharp contrast with the financial performance of its two closest rivals – Swedish Ericsson and Chinese Huawei.

Ericsson reported a net sales of 48.9 billion SEK in Q1, 2019 as against 43.4 billion SEK for the same period a year ago, showing a growth of 13%.

The firm’s operating profit for the quarter, however, beat the industry estimates and the company made 4.9 billion SEK as against a loss of 300 million in for the same period a year ago.

While Nokia claims it had bagged 36 commercial 5G contracts so far, Ericsson has announced commercial 5G deals with 18 global operators, which the firm claims to be more than any other vendor.

Nokia’s Q1 results have confused the industry watchers. While the industry thought Nokia might gain from the fact that Huawei, one of the fiercest rivals to these two European vendors, is being seen as suspicious telecom equipment maker and many markets including the U.S has somewhat blacklisted it from deploying 5G networks for its operators.

Nokia, too, echoed similar sentiment but with a cautious outlook.

“Competitive intensity has slightly increased in certain accounts as some competitors seek to be more commercially aggressive in the early stages of 5G and as some customers reassess their vendors in light of security concerns, creating near-term pressure but longer-term opportunity,’ it said.

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