Nokia's profit fell more expected in the second quarter, partly due to the reduction of telecom operators’ costs in the mobile network, while the company raised its target level of cost savings for the recently acquired Alcatel-Lucent (PA: ALUA).
Nokia reported that earnings before interest and taxes fell 49 % to 332 million euro ($ 370 million), which is far from the average forecast of analysts polled by Reuters, to 400 million euro.
The company, which acquired the Alcatel-Lucent Franco-American rival earlier this year, raised its target level of reduction for merger costs, saying that it is now going to increase the level of savings to 1.2 billion euro per year by 2018, compared with a previous forecast of more than 900 million euro.
Overall sales decreased by 11 % compared to the same period last year, to 5.67 billion euro, including a drop in network equipment sales to 5.23 billion, while analysts on average expected the figure at 5.42 billion.
The sales of equipment for mobile networks, which accounted for about 80 percent of the total decrease in network equipment sales, were particularly weak. The network unit revenue fell in all major markets, falling 12 % in North America and in Europe - the two largest regions for the company.
Telecommunication operators are trying to cut costs by switching to a virtual data network, which also implies a decrease of network equipment costs.
The German industrial conglomerate Siemens has improved the full-year profit forecast for the second time this year and increased the target for spending cuts as the quarterly performance of most of its units exceeded expectations.
The company said on Thursday it now expects a net profit of EUR 6.50-6.70 per share against the previous forecast of EUR 6.00-6.40 per share and reduced costs in the amount of 950 million to 1 billion euros ($ 1.06 - $ 1.11 billion) instead of 850-950 million in the fiscal year which ends in late September.
Profits of industrial divisions of Siemens rose by a fifth to 2.19 billion euro ($ 2.44 billion) in the quarter ended in late June, while analysts polled by Reuters on average expected a profit of 2.06 billion euro.