Nokia's Alcatel-Lucent acquisition advances re-entry into optical market, says research firm

Nokia (NYSE:NOK) is now the number two worldwide optical network equipment vendor.

The company returned to the optical network equipment market during the first quarter after completing its merger with Alcatel-Lucent (ALU) and absorbing ALU's optical network business. Among all optical network vendors, Nokia came in second only to Huawei, according to new research from IHS's Optical Network Hardware Quarterly Market Tracker.

In its first quarter after acquiring ALU Nokia saw nearly unilateral drops in revenues among its various business units except for IP Networks and Applications, which stayed relatively flat year-over-year. Nokia reported a non-IFRS gross margin of 38.3 percent in the first quarter due in part to improved product mix in IP/Optical Networks.

But the ALU deal led Nokia to posting a $583.5 million loss during the first quarter, largely due to acquisition related costs.

Nokia's re-entry into the optical network equipment market aside, the space saw global spending drop 12 percent sequentially despite a 13-percent rise year-over-year, according to IHS. The firm attributed the annual growth to accelerating 100G investment in long haul and metro applications.

Long haul wavelength-division multiplexing (WDM) spending grew 23 percent year-over-year and the 100G long haul market is seeing significant revenue coming in from ongoing projects in China and North America. According to IHS, many vendors are not anticipating any slowdown in 100G long haul demand.

Metro WDM also climbed 15 percent over the year-ago quarter, driven by expansion and wider adoption of more bandwidth intensive technologies.

"Data center expansion, public and private cloud adoption, preparation for broader introduction of 4K video and emerging virtual reality (VR) applications are expected to continue to drive the growth of bandwidth in the metro," IHS said in a statement.

For more:
- see this press release

Related articles:
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Nokia posts $6.38B in revenues, blames shortfall on 'challenging environment' in mobile networks
Nokia to cut thousands of jobs worldwide in effort to save $1B following Alcatel-Lucent acquisition
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