Nokia posted yesterday better than expected earnings for the second quarter of 2020. Nokia missed the analysts expectations in revenue, but achieved higher than expected profits, showing the company is on a good way. This report was also the last one with Rajeev Suri as the CEO. The earnings call organized later in the day revealed some interesting details about the business performance in Q2.
Nokia has some issues with their ReefShark SoCs for networks gear, but the company quickly tackled that problem by partnering with Broadcom and Marvel, as well as Intel, for a diversified supply. Nokia doubled the number of their system-on-chip developers and increased Reasearch and Development velocity by around 50%, also adopting a large scale agile development model.
In terms of deals, Nokia has 83 commercial 5G deals and 32 live 5G networks deployed. Nokia also mentions 180 private 4G and 5G deals. Private networks are used by companies in manufacturing and industries where there is a need for a closed, but reliable network.
In terms of Nokia Technologies, that handles the patent and brand licensing, that unit reported 11% year-on-year decline in revenue caused by a combination of lower one-time net sales, lower brand licensing and lower patent licensing net sales due to expired patent licensing agreements. The lower brand licensing revenue was driven by COVID-19.
Nokia continues to generate new intellectual property and expects to remain in the top 2 in 5G standard essential patents. In the earnings call it was also mentioned that OZO Audio is doing well. The OZO Audio tech is now included in 31 devices, which includes brands like Panasonic, OnePlus and ASUS, as well as the Nokia-branded phones made by HMD Global.
The stock market reacted positively to Nokia’s financial report with the stock price going up 12% on Helsinki Stock Exchange and 7% on the New York Stock Exchange.
You can find the full transcript at SeekingAlpha.com.