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Finnish telecoms giant Nokia on Thursday posted quarterly operating profit that fell short of market expectations.
The firm reported operating profit of 479 million euros ($524.94 million) in the first quarter, down from 583 million in the same period last year.
The number was also below a forecast of 532.4 million euros from analysts polled by Refinitiv.
Nokia said its comparable gross margin also fell 300 basis points to 37.7% from 40.7%.
This was “due to regional mix and a lower contribution from Nokia Technologies partly related to a license option exercised in Q4 2022,” Nokia said in a statement.
Nokia grew its net sales by 10% to 5.86 billion euros, which was better than the 5.72 billion euros estimated by analysts.
“We have seen a shift in our regional mix. We had slowdown in North America but we had really strong growth in India,” Pekka Lundmark, CEO of Nokia, told CNBC.
Shares of Nokia tumbled sharply on news of Nokia’s earnings report, plunging nearly 10% by Thursday afternoon.
Addressing the negative share price reaction, Lundmark said it reflected disappointment in its technology licensing business and a changing regional revenue mix.
That side of the business had an annual run rate of 1 billion euros, falling short of Nokia’s 1.4 to 1.5-billion-euro target.
“Network infrastructure and mobile networks businesses are doing fine, so we are really talking about the technology licensing business where we are close to [a] significant deal with Samsung in the first quarter,” Lundmark told CNBC’s “Squawk Box Europe.”
“We have ongoing litigations with [Chinese smartphone makers] Oppo and Vivo.”
Nokia saw a slowdown in its North America business, according to Lundmark.
“There was quite a lot of inventory depletion in North America because the investments were really high last year,” Lundmark said.
“Our customers were building inventory unsure we would be able to deliver because of the component shortages, and now they are consuming some of that inventory.”
Still, Nokia’s India business saw considerable growth thanks to strong sales of its 5G equipment.
“We had really strong growth in India,” Lundmark said. “India was 15% of our sales in Q1, whereas it was only 5% last year.”