Shares in the company rose 12.69% to $20.25 in New York on the news, and other equipment suppliers including Nortel, Lucent, Ericsson and Alcatel all registered gains on hopes that the famine in spending on equipment may be over.
While an excellent performance from its mobile handset business is not unexpected given the company’s position as market leader, what is surprising is the growth of its networks division, which had been hard hit by the reluctance of carriers to invest in new equipment.
The Espoo, Finland-based telecoms equipment giant said that operators across all regions, but particularly in the US and China, had money left over in their budgets and it benefited from a rush of orders. As a result, Nokia Networks sales reached 1.7bn euros ($2.2bn) in the fourth quarter, way above its original estimate of 1.4bn euros ($1.8bn). CEO Jorma Ollila said the results were the result of stronger than expected year-end operator investments and product mix.
The company axed 2,300 jobs in its loss-making networks division last year after sales tumbled but the fourth-quarter upsurge suggests a market that has been savagely hit by reduced spending may be about to recover. While Nokia originally estimated that its networking business would break even in the fourth quarter it now expects a pro forma operating margin of approximately 12%.