Nokia’s Margins Rise as Revenue Slump Slows

 

Nokia (NYSE: NOK) reported its first-quarter results before the market opened on April 27. Total revenue declined, but at a slower pace compared to the fourth quarter. Non-international financial reporting standards (non-IFRS) profit soared, driven by cost-cutting and increased margins for the networks business. The networks business will continue to decline during the rest of the year, but Nokia expects margins to keep moving higher. Here’s what investors need to know about Nokia’s first-quarter results.

Nokia results: The raw numbers

Metric

Q1 2017

Q1 2016

Year-Over-Year Growth

Sales

5.34 billion euros

5.62 billion euros

(4%)

Profit

203 million euros

139 million euros

46%

Earnings per share

0.03 euros

0.03 euros

0%

Data source: Nokia. All figures non-IFRS.

Image source: Nokia.

What happened with Nokia this quarter?

  • Nokia’s networks revenue slumped 6% year over year to 4.9 billion euros; it was down 7% adjusted for currency. Ultra broadband networks revenue fell 4%, while IP networks and applications revenue dropped 10%.
  • Within ultra broadband networks, mobile networks revenue declined by 1% to 3.1 billion euros, while fixed networks revenue plunged 19% to 501 million euros.
  • Networks gross margin rose 90 basis points year over year to 39.5%, while operating margin rose 10 basis points to 6.6%.
  • Nokia technologies revenue grew by 25% year over year to 247 million euros. Gross margin fell 430 basis points to 94.7%, while operating margin fell 650 basis points to 47%.
  • HMD Global, Nokia’s exclusive brand licensee for mobile phones and tablets, will begin shipping three Nokia-branded smartphones during the second quarter. Nokia will receive a royalty on each unit sold.
  • On Feb. 9, Nokia announced that it was acquiring Comptel Corp. as part of its plan to build a stand-alone software business.

Nokia provided the following pieces of guidance for investors:

  • Annual cost savings of 1.2 billion euros from Nokia’s merger with Alcatel-Lucent by 2018, unchanged from previous guidance.
  • The networks business is expected to decline at a low-single-digit rate this year, in line with the primary addressable market. Operating margin is expected between 8% and 10%.
  • Nokia again provided no guidance for the technologies segment due to risks and uncertainties determining the timing and value of licensing agreements.Nokia's Margins Rise as Revenue Slump Slows

What management had to say

Nokia CEO Rajeev Suri summed up the quarter:

Nokia’s first quarter 2017 results demonstrated our improving business momentum, even if some challenges remain. We slowed the rate of topline decline and generated healthy orders in what is typically a seasonally weak quarter for us. We also continued to see expansion of cross-selling across our full portfolio, delivered excellent gross margins and improved group-level profitability.

Suri is optimistic about Nokia’s performance in 2017: “Overall, given Nokia’s performance in the first quarter, I am optimistic about the year ahead, even if cautiously so. Our competitive position is strong, we are executing well, and, as a result, we are able to confirm our guidance for full-year 2017.”

Nokia’s guidance for the full year remains unchanged. The networks business is still in decline, but both gross and operating margins rose during the first quarter, and Nokia expects further improvements in profitability as the year goes on. Nokia’s cost savings program is helping to drive the bottom line higher, and that remains on track to be completed by the end of 2018.

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Samsung ‘Accidentally’ Reveals Galaxy Note 8

It isn’t long now until the Galaxy Note 8 launches, and given the radical changes coming it seems even Samsung can’t resist ‘accidentally’ teasing this phone…

Using the company’s official Twitter account for its Exynos chipsets, today Samsung tweeted a promotion for the Exynos 8895 – the chipset used in the Galaxy S8 and Galaxy S8 Plus. But the phone used in the promotion was neither of these well known flagships.

Galaxy Note 8 based on multiple leaks

Concept Creator

Galaxy Note 8 based on multiple leaks. Image credit: Concept Creator

Instead Samsung gave us a good look at a new smartphone with an Infinity Display which has even smaller bezels than its two flagships. A smartphone which matches up almost exactly with the leaked renders, schematics and cases for the Galaxy Note 8 and which also features the curved edge display expected to debut for the first time this year on the Note range.

Samsung promotes the Exynos 8895 with the Galaxy Note 8?

Samsung

Samsung promotes the Exynos 8895 with the Galaxy Note 8?

Needless to say, the tweet set Twitter users into a frenzy. In the meantime Samsung has kept quiet about the image while – crucially – not removing it.

Both moves are understandable. The ‘accidental’ reveal builds interest ahead of the launch while the silence on adds to it. It’s Smart Marketing 101.

Furthermore the angle of the handset Samsung shows does not answer the most contentious aspect about it: whether the fingerprint sensor will be integrated into the bottom of the display or not. Multiple leaks suggest Samsung hasn’t been able to pull this off and it will remain rear mounted in a slightly less ridiculous place.

Olixar's Galaxy Note 8 range is now on sale

Mobile Fun

Olixar’s Galaxy Note 8 range is now on sale

Were this the Galaxy S8 or Galaxy S8 Plus or even just a generic image then Samsung would have surely have had no issue showing this part of the phone. Yes it could be a coincidence, but it would be one heck of a coincidence just a month from launch and two months before Apple’s headline grabbing (if troubled) 10th anniversary iPhone is unveiled.

Samsung is not that naive.

Of course it isn’t just the iPhone 8 which Samsung has to worry about. With Google’s heavily redesigned Pixel 2 XL breaking cover this week and arriving in a similar time frame it means the smartphone wars are reaching boiling point. And with such competition comes the need for an occasional ‘accident’…

 

Update to correct red-tint display problem on Galaxy S8 and S8+ released on T-Mobile

 

Earlier this week, a software update addressing the red-tint issue affecting the display on Samsung’s Galaxy S8 and S8+ smartphones began rolling out in some European countries. The fix, weighing in at 426MB introduced additional Adaptive Display mode options, providing users the ability to adjust color balance and white tones around the edges of the screen.

Now, it appears that over-the-air updates are being distributed to both handsets on T-Mobile to solve the problem. These updates, with the sole enhancement listed as being ‘Reddish display fix’, will bring the baseband version up to G950USQU1AQDE and G955USQU1AQDE for the Galaxy S8 and S8+ respectively.

According to T-Mobile’s support pages for the Samsung Galaxy S8 and the Galaxy S8+ users can expect to download under 150MB to obtain the update. However, users should ensure that their device has at least 50% battery charge before proceeding with the update.

With T-Mobile seemingly first out of the blocks in the country, it can only be hoped that other carriers in the US and around the world are not too far behind in releasing the fix to their customers.

 

‘Fitbit of sleep’: Apple buys night-time tracking firm Beddit

Apple has bought Finnish sleep tracking firm Beddit to boost its health and fitness services, as it attempts to secure its place in the “quantified self” market.

Beddit, which was founded in 2007 and has been selling its sleep tracker in Apple stores since 2015, confirmed the acquisition with an updated privacy policy.

The update revised on 8 May said: “Beddit has been acquired by Apple. Your personal data will be collected, used and disclosed in accordance with the Apple privacy policy.”

Terms of the deal were not disclosed, but Beddit had raised $3.5m (£2.7m) in funding since it was founded.

The £130 Beddit sleep tracker consists of a 1.5mm thick strip of sensors that are placed on ttop of the mattress and connected to a wall outlet for power. Combined with an Android or iPhone app, the Beddit 3 sleep sensor tracks sleep time and quality, heart rate, breathing rate and snoring. It also acts as an intelligent alarm clock that wakes you up in the lightest sleep phase.

The Espoo-based company partnered with fitness tracking firm Misfit in 2014 to create the co-branded Misfit Beddit, before Misfit and its Shine fitness tracker were acquired by watchmaker Fossil group for $260m in November 2015.

Beddit has been described as the “Fitbit of sleep” for its easy to use sensor and comprehensive night-time tracking and analytics, an area that Apple is weak. To date Apple has not featured sleep tracking at all within its iPhone or Apple Watchfitness apps.

Third-party sleep tracking apps, including Beddit, have filled the gap using the iPhone, but with its requirement of a nightly charge, sleep has remained the Achilles heel of the Apple Watch’s otherwise fairly comprehensive health-tracking tools.

Apple Watch on a wrist
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Apple has overtaken Fitbit to become the world’s largest wearable device manufacturer with the Apple Watch. Photograph: Issei Kato/Reuters

Apple, which has become the first company to top the $800bn mark in market capitalisation, has found itself in a battle with San Francisco-based Fitbit for not only the top smartwatch, but also the top wearable device. Until recently, Fitbit was the market leader in wearable device sales, but according to data from Strategy Analytics, Apple has overtaken Fitbit to become the world’s largest wearable device manufacturer, shipping 3.5m Apple Watches and holding 16% of the global market in the first quarter of 2017, a figure up 59% year-on-year. Apple was closely followed by China’s Xiaomi with 3.4m wearables shipped and 15% of the market, while Fitbit slumped to third with just 2.9m wearable devices and 13% of the market, down 36% year-on-year.

With wearable device shipments growing by 21% to 22m units in Quarter 1 2017, it is a market Apple could use to contribute a meaningful sum to its bottom line, which is currently dominated by a single product – the iPhone – that has seen declining sales.

While the initial focus for smartwatches, including Google’s Android Wear watches and the Apple Watch, was around apps and notifications, it quickly became apparent that health and fitness was a driving reason that customers bought the items.

For Apple and any other smartwatch makers, comprehensive fitness and health tracking is essential. Sleep tracking has remained the domain of fitness trackers such as the Beddit, or wrist-worn devices such as the Fitbit Charge, which do not need charging each night to last through the day.

Whether Apple will continue to sell the Beddit sleep sensor remains to be seen. It is likely the technology and sleep analysis behind it will end up in future Apple products, including the Apple Watch.

 

Samsung Z4 Tizen 3.0-Powered Smartphone With 4.5-Inch Display Launched, Coming First to India

 

Samsung on Friday launched its newest Tizen-powered smartphone – the Samsung Z4 – and it runs on Tizen 3.0 OS. The smartphone will be launched in select markets across the world, starting with India in May. The Samsung Z4 will be made available in Black, Gold, and Silver colour variants depending on the market. For now, the company has not detailed the Samsung Z4 price or its exact launch date.

The most interesting aspect about the new phone from Samsung is its camera department. The Samsung Z4 comes with a 5-megapixel rear camera with dual-LED flash support and at front it features a 5-megapixel sensor with f/2.2 aperture and LED flash support. The company claims that both front and rear cameras on Samsung Z4 are “optimised for social media” and offer features focused on convenience and creativity. The rear flash module also appears to be shaped similar to the Smart Glow notification system unveiled with the Samsung Galaxy J2 (2016).

The Samsung Z4 will be made available in both single and dual-SIM variants depending on the market. It sports a 4.5-inch WVGA (480×800 pixels) display with 2.5D curved glass on top, which the company says is a first for its Z-Series Tizen smartphones. It is powered by a 1.5GHz quad-core processor coupled with 1GB of RAM.
While Samsung is yet to detail the inbuilt storage offered by the device, the connectivity options offered by Samsung Z4 include 4G VoLTE, Wi-Fi 802.11 b/g/n, Bluetooth 4.0, USB 2.0, GPS, and Glonass. The smartphone houses a 2050mAh battery. The Samsung Z4 measures 132.9×69.2×10.3mm and weighs 143 grams.Samsung Z4 Tizen 3.0-Powered Smartphone With 4.5-Inch Display Launched, Coming First to India

“We’re dedicated to providing our customers with devices that offer smarter mobile interactions,” DJ Koh, president of mobile communications business at Samsung Electronics, was quoted as saying in the company’s release. “The Samsung Z4 brings a simplified mobile experience to first time smartphone users and represents our ongoing commitment to expanding the Tizen ecosystem,” Koh said.

As the name indicates, the Samsung Z4 is the fourth smartphone in Samsung Z series. However, it cannot be called the successor the Samsung Z3. The South Korean giant has muddled the naming scheme, at least in terms of chronology. The first Samsung Tizen smartphone to have been unveiled was the Samsung Z, however, that never hit markets. Next, was the Samsung Z1, which was launched in January 2015. Next, strangely enough, was the Samsung Z3, unveiled in October 2015. Finally, we got the Samsung Z2, which was unveiled in August 2016.

 

BlackBerry KEYone review: pushes all the right buttons

The KEYone got me out of CrackBerry retirement and using a BlackBerry Smartphone again (and loving it!). I have no shortage of phones at my disposal and can reach for an iPhone or Google Pixel or Samsung Galaxy whenever I want. Since picking up the KEYone, I’ve never felt that urge. What more can be said than that? With battery life that will last you all day and night (and well into the next day) and a smart physical keyboard that makes typing on buttons feel new school again, it’s a communication-centric phone that power users will love.Image result for BlackBerry KEYone review: pushes all the right buttons

The keyboard BlackBerry phones are the phones I wish were more popular, but really aren’t. The Priv had QA and update issues (it’s still on an old version of Android), and this one isn’t exactly my personal cup of tea because I’d much rather have a slider (preferably a horizontal slider). Still, I hope these phones somehow manage to find a small, but perhaps profitable niche so they can keep throwing time and development at them.

 

HTC hoping to put squeeze on competitors with new smartphone

HTC’s new flagship smartphone is expected to feature technology that enables users to squeeze it as a form of interaction.

Reports claim the new phone, allegedly named the HTC U, will contain sensors that enable users to take photos and launch apps just by squeezing the device.

The Taiwanese smartphone giant is holding a live event in Taipei on Tuesday where the new flagship device is expected to be revealed.

Improvements to the camera and battery life are also likely to be discussed during the unveiling.

In the run-up to the event, the tech giant has frequently mentioned its new device’s “squeezable” ability in marketing campaigns, but the full extent of the technology is still not known.

The company has said it plans to introduce “a new way to interact with your smartphone” as part of the launch and has teased the squeezing method in videos on its Twitter account.

 HTC is expected to host an event in Taipei

A mainstream smartphone featuring a “squeezable” interaction has not been attempted previously.

Since its One M8 smartphone picked up multiple phone of the year awards in 2014, HTC has struggled to maintain and replicate that success.

The manufacturer has come under increased pressure from Samsung and Apple, as well as emerging Chinese firms such as OnePlus and Huawei.

HTC remains a popular manufacturer on the Android platform, however the tech firm has enjoyed more notable success in the last year with the launch of its virtual reality headset, Vive.

 

BlackBerry Updates: New Smartphone Launches, Automotive Security

 

BlackBerry has had an interesting couple of weeks, following its surprise $815 million arbitration award from Qualcomm in mid-April. The company’s hardware partners have lined up new smartphone launches, while there have been reports that the firm will enter the automotive security space. The stock has also fared reasonably well, breaching the $10 level for the first time in close to two years, driven by the award as well as the recent ransomware attacks on PCs, which have brought focus back onto cyber security, which remains one of BlackBerry’s core competencies. In this note, we take a look at some of the recent developments for BlackBerry, and what they could mean for the company.

Trefis has an $8 price estimate for BlackBerry, which is below the current market price.

BlackBerry Smartphone Updates

While BlackBerry announced that it would exit the handset business last year, the company continues to work with hardware partners in markets including China, Indonesia and India, who manufacture and sell BlackBerry-branded devices. TCL, one of Blackberry’s partners based in China, recently launched a new device called the KeyOne that has received reasonably positive reviews from critics. The device sports a physical keyboard in addition to a touchscreen and runs BlackBerry’s modified version of the Android software with security enhancements. Separately, the Optiemus Group, which holds the license to manufacturer BlackBerry branded hardware in India, plans to invest about $30 million to relaunch the brand in the market. Image result for BlackBerry Updates: New Smartphone Launches, Automotive SecurityThe firm intends to initially focus on enterprise users, selling primarily via retail chains, before widening distribution to other vendors. The company plans to launch two new models over the next few months, priced at under $600 and $300, respectively. BlackBerry will bank on these new launches to keep the roughly 14 million users on the BlackBerry platform worldwide engaged, while bringing in some high-margin licensing dollars.

BlackBerry’s Automobile Security Play

BlackBerry is reportedly developing security software for the auto market, working with two high-end car companies. The solution apparently acts as a virus scanner for automobiles, warning drivers when a vehicle could be compromised, while also installing software patches to vehicles. This could be a sizable market for Blackberry in the long run, as automobiles are being shipped with an increasing amount of computing power and internet connectivity, bringing about security related risks. BlackBerry could be well positioned to cater to this market, given its strong presence in the automobile industry (its QNX software powers infotainment systems on over 50 million vehicles) and also due to its exposure to the secure communications space.

Apple has finally found someone to support HomeKit

 

It’s been a year since Apple officially launched its internet-of-things smart-home service – an event that we noted at the time was somewhat undermined by the fact that there were virtually no products that worked with it.

Twelve months later and two weeks out from its annual conference, Apple has finally snagged its first big customer. What’s more, Belkin says that its compatibility with Apple’s HomeKit standard won’t just extend to a single product, but to every Wemo device it has produced – every smart plug, switch, light and camera.

There’s only one downside: you will have to buy a specific HomeKit bridge to make it work.

“Wemo is offering this bridge to address the overwhelming request from customers to make currently installed Wemo products work with HomeKit and other HomeKit compatible products,” said Belkin’s CTO Brian Van Harlingen cheerfully, adding: “We’re proud to work with Apple to bring together two of the most influential Smart Home platforms.”

This is quite a shift from exactly a year ago when Belkin decided it wasn’t going to bother with Apple’s tightly controlled ecosystem.

“We hear you, Wemo fans. Trust us, we do. We know you really want HomeKit compatibility for your Wemo devices and we are sorry that we’ve kept you hanging for so long,” it opined in a blog post in March 2016. “But the short answer is that Wemo will not work with HomeKit in the immediate future. Before you get mad and stop reading, please hear us out…”Happy business people celebrate. Photo by Shutterstock

But why?

And the reason behind the decision was the same as pretty much every other manufacturer of smart home products: Apple’s insistence that its own special chip be added to all products to make them work.

“Right now the only way to make Wemo work with HomeKit is to build a completely separate line of products and we don’t think that makes sense for the overall Wemo ecosystem,” the company explained.

“HomeKit integration requires a specific hardware component and cannot be accomplished with a software or firmware update to existing devices. Though we have tried to find a workaround solution, thus far nothing has fallen within Apple’s HomeKit guidelines.”

The decision by Apple back in 2015 to require people to use special hardware to work with its system has been a disaster for the company.

It had to scrap its plans to launch HomeKit with a new “Home” app for the iPhone at its annual Worldwide Developers Conference (WWDC) that year, despite having teed it up the year before.

It took another year for the app to appear, and even then it was a half-hearted effort, with senior VP of software engineering Craig Federighi doing his best to sound excited.

What we found most notable was the fact that half of the customers listed on the slide Federighi shared with WWDC attendees two years earlier were no longer featured.

Arrogant

The reality is that Apple’s arrogance has caused it – not for the first time – to overplay its hand. It changed course on its smart home plans when they decided it needed to build security into the product and, being Apple, that it had to be in control of that.

Apple’s logic was that smart homes would rely on smart phones, and as the maker of the iPhone it was in a position to effectively dictate the market. All it would need to do is create an easy-to-use app and everyone would jump on board.

Except they didn’t. And the smart home market has slowly grown with only a few companies bothering to include HomeKit in their plans. “HomeKit collides with the rest of the industry,” the CEO of WigWag, Ed Hemphill, told us when we asked around about the dearth of HomeKit products back in October. “Their approach is just onerous and unnecessary.”

But Apple is not out of the running just yet. The slow acceptance of smart home products by consumers, combined with continuing security concerns over smart home and internet-of-things devices, means that the market has not moved as swiftly as many expected.

However, with industry and governments now getting serious about new IoT security standards, and with devices like Amazon’s Alexa and Google’s Home adding voice control and activation into homes, that window of opportunity is closing.

This year’s WWDC will be on June 8 and if Apple doesn’t announce something that moves it forward drastically when it comes to the smart home, by the time June 2018 comes around it may well have lost its chance to grab a decent chunk of the market.

Behold the bridge: Wemo changes its tune, but there’s no escaping the clunkiness of the solution

Rule change?

Last year, Wemo said that “no current Wemo device will ever be able to work with HomeKit unless Apple changes its rules.” We asked Belkin if that meant Apple has relaxed its rules to make the new bridge viable; Belkin told us no.

“The rules haven’t changed – we decided to go with a bridge approach so that would go onboard all current Wemo users. We had lots of customers asking for support,” a spokesperson told us.

It’s possible that Belkin felt that demand was sufficiently large from Apple users for there to be a market for the bridge (it will be out this fall for an undisclosed sum), but just as likely is that it has received early notice of Apple’s plans and decided that something was better than nothing.

But the reality is that a bridge is a terrible compromise. It will need to be plugged into your router and presumably also into an electrical socket. Control commands will then have to pass through it to your various Wemo products. It is inelegant to say the least and a step back for an industry that realized a long time ago that adding a new bridge every time you install a new smart home device from a different manufacturer was never going to scale.

The future is undoubtedly in using standards and protocols that allow products to work and communicate together without having to pass through proprietary interfaces. So while Belkin’s decision to support HomeKit is a sign that Apple is not yet a smart-home lost cause, it does highlight the fundamental stumbling block that continues to exist with Apple’s product.

Unless Apple plans to bring out its own line of smart home products, it’s hard to see how it is going to persuade everyone else to play ball.

The case for BlackBerry at $45 US a share

 

An automobile running Blackberry QNX software is shown during the Milken Institute Global Conference in Beverly Hills, Calif., in this May 2, 2017, photo. (Mike Blake/Reuters)

BlackBerry Ltd. shares have been on a hot streak — rising more than 60 per cent in recent weeks — and one technology analyst thinks some of the company’s new products have the potential to help push the stock to $45 US in three years.

In a recent report, Gus Papageorgiou, associate director of technology research at Macquarie Capital Partners, pointed to two BlackBerry products — its Radar system for monitoring truck trailers and containers, and the QNX operating software system used to run vehicle systems — as drivers of the company’s future.

The Radar system can monitor the load status of a truck trailer, its location, and whether the doors are open or closed, among other things. That can help shipping companies better manage their trailers. Papageorgiou says some early customers are reporting a 17 per cent reduction in the number of trailers they require, along with opportunities to charge customers who hold on to trailers too long.

  • BlackBerry awarded $815M in arbitration with QualcommAn automobile running Blackberry QNX software is shown during the Milken Institute Global Conference in Beverly Hills, Calif., in this May 2, 2017, photo.

Meanwhile, BlackBerry QNX currently dominates the infotainment software market for vehicles with an estimated market share of 50 per cent, Papageorgiou’s report says. The software runs in about 60 million vehicles.

Last year, Ford Motor Co. signed a deal with BlackBerry to ramp up the installation of QNX in its vehicles. Ford and BlackBerry also reached an agreement to shift up to 400 workers to the automaker to bolster its efforts to develop a self-driving car.

“I think these are very healthy markets where they have advantages,” Papageorgiou said in a recent interview with Dianne Buckner for CBC News Network’s On the Money. “The business they’re getting into is highly recurring software business with high margins, so I think there is potential here.”

Searching for reinvention

A former leader in the smartphone business, BlackBerry’s fortunes tumbled amidst strong competition in the handset market. The battered company has since been trying to reinvent itself with a new focus on software.

“I think they’re finally delivering some promising business lines,” Papageorgiou said.

  • BlackBerry’s software shift ‘100 per cent complete,’ but branding challenge remains

The company’s stock has been on the rise of late, hitting levels not seen in four years. Since the end of March, it has gone from under $10 on the TSX to close Thursday at $15.12. On Nasdaq, the stock closed at $11.22 US, up from about $7 US at the end of March.

Papageorgiou said the Radar and QNX innovations could contribute $2 billion or more in software revenue in three years, and earnings per share of about $1.80. Based on a price-earning multiple of 25, that translates to a stock price of $45, he says.

For the more immediate future, Macquarie’s take on BlackBerry’s stock is decidedly more modest. The firm bumped its 12-month target for the issue from $10.50 US and $14 Cdn to a new goal of $11.80 US and $16.20 Cdn.

Given the volatile nature of the technology market, it’s not clear cut that things will play out in favour of BlackBerry. A recent article in Forbes pointed out that both Apple and Google’s parent company, Alphabet, have been showing interest in the automotive market.

Apple has been reported to be working on its own operating systems for a self-driving car, while Alphabet has launched its own Android Automotive infotainment system. Both firms have massive resources to throw at automotive projects.