Nokia's Network Profits Drop, Raise Concerns Over Alcatel Deal

[Ron Burgundy]

By Jussi Rosendahl and Leila Abboud HELSINKI/PARIS (Reuters) - Finland's Nokia reported quarterly profits well below market forecasts at its telecom network equipment business, sending its stock tumbling 10 percent and raising concerns over its planned takeover of smaller rival Alcatel-Lucent . First-quarter revenue was ahead of expectations, but operating profit dropped 61 percent, which Nokia blamed largely on the need to cut prices to secure major mobile contracts in China and on weaker software sales. With Nokia shares now trading about 20 percent lower than before the Alcatel deal was announced, significant divergence in the performance of both companies could call into question the terms of the all-share offer valuing Alcatel-Lucent at 15.6 billion euros ($17.5 billion), analysts said. Alexander Peterc, an analyst from Exane BNP Paribas, said it would arguably be better for the deal's prospects if Alcatel also posted a weak first quarter.

View the full article