Nokia said today that its net sales of telecoms equipment fell more than expected in the first quarter.
The Finnish company warned earnings in its mainstay business would decline this year due to weakening demand for mobile gear in key markets.
In its first unified earnings report since taking control of rival Alcatel-Lucent in January, Nokia also nudged up its cost-cutting target for the merger.
It said it was now seeking savings of "above" €900m in the course of 2018, compared with "approximately" €900m previously.
Net sales at the combined networks business dropped 8% in the first quarter from a year ago to €5.18 billion, Nokia said, missing analysts' average forecast of 5.51 billion in a Reuters poll.
Nokia said it expected networks sales in the full year to decline due to weak investing by mobile operators as well as its focus on integrating Alcatel-Lucent.
"While our revenue decline was disappointing, the shortfall was largely driven by mobile networks, where the challenging environment is not a surprise," chief executive Rajeev Suri said.
First-quarter net sales fell 17% in North America, the company's largest market, while declining 11% in the Middle East, 6% in Asia-Pacific and 5% in China.
It forecast a full-year operating margin of above 7% for the networks business, compared with analysts' average estimate of 9.4% and 6.5% in the first quarter.
Analysts expect the margin to rise to 11.6% by 2018 once the cost cuts from the merger have been completed.
Nokia acquired Alcatel in a €15.6 billion all-stock deal to help the Finnish company more broadly compete with Sweden's Ericsson and China's Huawei in a market with limited growth and pressure on prices.
Nokia started the cost-cutting programme last month, saying it was planning to axe thousands of jobs worldwide, including 1,400 in Germany and 1,300 in Finland.
