Cheer for Nokia with improved profits

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TELECOMS GEAR maker Nokia yesterday announced a stronger-than-expected quarterly profit margin in its core networks unit helped by cost cuts and said its full-year expectations had improved.

Nokia sold its once-dominant phone business to Microsoft in April. After the deal, almost 90 per cent of Nokia’s sales come from its network unit.

The April-June quarter marked the first for chief executive Rajeev Suri, who was promoted in April from his previous role as networks unit chief.

The company posted a second-quarter operating profit for the networks business of 281 million euros (£222m), down 14 per cent year on year but well above the 197 million euros forecast on average by analysts.

“This was a very strong report in every aspect,” Inderes analyst Mikael Rautanen said.

“Networks profitability was above all expectations, and as a cherry on top, they raised the network unit’s full-year profita-bility.”

Network gear makers have benefited from network capacity upgrades in developed markets as operators cope with a surge in mobile data traffic.

Last week Nokia’s larger rival Ericsson posted stronger-than-expected results on strong sales in North America, where Nokia has traditionally been weak.

Nokia repeated that it expected network sales to return to growth in the second half of the year. In the April-June period, network sales fell 8 per cent.