Unloading of Handset Division Boosts Nokia's Forecast
Shares of Nokia Networks got a big boost Thursday after the company raised guidance for the the fourth quarter, saying that it continues to see improvements from the sale of its handset division to Microsoft.
Nokia Networks said that its forecast has improved on operational efficiencies gained from the sale of its handset unit to Microsoft. The company expects underlying profitability for Networks to be at or slightly above its long term target range of 5 to 10 percent for the full-year 2014.
Nokia Networks reported a second-quarter operating profit of $378 million on $3.5 billion in net sales. That's compared to a $441 million operating profit on $3.7 billion in the same quarter last year.
Nokia Technologies net sales increased sequentially, which the company attributed to Microsoft becoming a more significant intellectual property licensee in conjunction with the sale of it Devices and Service business to Microsoft.
Nokia sold its handset division, which produces the Lumia line of smartphones, for $7.5 billion. Without that business weighing down its networks division, Nokia has turned its attention to lucrative contracts for upgrades to China Mobile, and China Telecom's networks.
Nokia ended quarter with gross cash of approximately $12.1 billion and net cash of $8.7 billion compared to $9.2 billion and $2.8 billion, respectively at the end of the first quarter.
Shares of Nokia were up over 6 percent in early trading Thursday to $8.16.