Nokia is expecting a steady fall in sales of its network equipment in this week results, which is attributed to management issues after selling one of its handy handset division to tech giant Microsoft for 5.4 billion euros.
Nokia Solutions and Networks (NSN), however, showed improved profitability because of cost cutting and give the company a cushion against its declining handset business during recent quarters.
The NSN business after the end of its major projects in Japan and South Korea and is expected to report a decline of 19% to 3.2 billion euros in fourth-quarter sales and a net 17% fall to 11.4 billion euros in 2013 as a whole.
NSN decline would follow 26% fall in sales of third quarter. Nokia is facing tough competition from industry leader for broadband networks, China’s Huawei and Ericsson.
Rajeev Suri, NSN’s chief, in an interview with the Reuters confirmed last November that NSN is now prioritizing its revenue growth.
Analysts said that NSN in coming quarters must demonstrate that shift, and margins dips of 8 to 10% can be accepted.
The adjusted fourth quarter operating margin for NSN is still likely to be high. NSN forecast it be 8 to 16 percent compared with 8 percent in the third quarter.
This is higher than rivals like Ericsson, which reported operating margin of 8% in last quarter.
Sami Sarkamies, analyst at Nordea Markets said that NSN’s next challenge will be to explore new businesses and to stabilize its declining sales in Asia. Nokia is currently busy in building out wireless broadband networks in Asia. Asia and China, over all accounts 41% of NSN’s sales of 2.59 billion net sales in the third quarter.
As per analysts Nokia is expected to show a decline in shipment of its handset in current week. Nokia quarterly smartphone shipments are expected to be up 53% as compared to a year earlier to 10.7 million, however it will be still lagging behind Samsung and Apple .
Company sources revealed last week that its board was still in process of finalizing Nokia’s new structure and leadership.
NSN’s Suri is expected widely for the slot of CEO , with investors are also backing up due to his good track record of NSN.
Some sources however are also taking names of Timo Ihamuotila, Nokia’s CFO and interim president for CEO seat, backed up by investors who think that Nokia future lies in Nokia’s HERE navigation software or in technology patents.
Ihamuotila as CFO, has gained experience in acquisitions and mergers which could be useful.