Matt Shimao - Head of Investor Relations Rajeev Suri - President and Chief Executive Officer Timo Ihamuotila - Executive Vice President and Chief Financial Officer

Sandeep Deshpande - JPMorgan Gareth Jenkins - UBS Francois Meunier - Morgan Stanley Stuart Jeffrey - Nomura Alexander Peterc - Exane BNP Paribas Tim Long - BMO Capital Markets Andrew Gardiner - Barclays Richard Kramer - Arete Research Mike Walkley - Canaccord Ehud Gelblum - Citigroup Kulbinder Garcha - Credit Suisse Mark Sue - RBC Capital Markets Jasmeet Chadha - Bernstein

Good day. My name is Carmen and I will be your conference operator today. At this time, I would like to welcome everyone to the Nokia Q2 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session (Operator Instructions). I would now like to turn the call over to Matt Shimao, Head of Investor Relations. Mr. Shimao, you may begin.

Ladies and gentlemen, welcome to Nokia's second quarter 2014 conference call. I'm Matt Shimao, Head of Nokia Investor Relations. Rajeev Suri, President and CEO; and Timo Ihamuotila, EVP and CFO, are here in Espoo with me today. During this call, we'll be making forward-looking statements regarding the future business and financial performance of Nokia and its industry. These statements are predictions that involve risks and uncertainties. Actual results may therefore differ materially from the results we currently expect. Factors that could cause such differences can be both external, such as general economic and industry conditions, as well as internal operating factors. We have identified these in more detail on the risk factors section of our 20-F for 2013 and in our Interim Report issued today. Please note that our results press release, the complete interim report with tables and the presentation on our website include non-IFRS results information in addition to the reported results information. Our complete results report with tables available on our website includes a detailed explanation of the content of the non-IFRS information and a reconciliation between the non-IFRS and the reported information. With that, Rajeev, over to you.

Thank you, Matt, and thanks to all of you for joining. It is a pleasure to speak to you today after my first quarter as CEO and after what was a very positive quarter for the company. Before I go into the details of our performance, however, I thought I would provide an update on the five priorities I set for my first 100 days and which I outlined on the call last quarter. The first of those priorities was engaging and understanding. Since being appointed, I have met with senior customers, including the CEOs of Deutsche Telekom, Vodafone, China Mobile and SoftBank. I have talked to more than 15,000 employees in town hall meetings on three continents. I have spent time with government leaders, including the Premier of China and the Prime Minister of Finland. And I have engaged with many of our largest investors in San Francisco, Helsinki, London, representing about 30% of our shareholder base. These meetings have helped give me a perspective on how we are viewed today, our strength and weaknesses and the hopes and concerns people have for our future. The second priority was to move rapidly from the high-level strategy and vision that we announced last quarter to bold and detailed execution plans. We will share more about the work that we are doing in this area at the Capital Markets Day that we are planning for November. But I am confident that we are heading in the right direction. Of course, we are not waiting to act. To take just one example, we have recently announced five acquisitions, Medio and Desti for HERE and Mesaplexx, SAC Wireless and a 3D geolocation solution from NICE Systems for Networks. These are the kind of deals we like, modest in size, relatively easy to integrate and providing access to new technology that we scale up or execution capabilities that bring us closer to key customers. My third priority was to develop and implement a number of key systems across our business. I am pleased that we have already begun to implement a new operational governance model, including a company-wide performance management process. These steps will be codified into what we are calling the Nokia Business System, which is designed to ensure that we have best practices based upon common processes, spanning the whole company in a number of areas that include talent development, M&A integration, cost management and lean methodologies. The fourth priority was culture. Today, we are taking the important step of sharing our new company values with almost 2,000 of our senior leaders, who will then help cascade those values to all employees. By September, we expect to be well on track with our overall cultural transformation, where we will focus on a common culture across the entire organization, with some differences between the businesses that reflect their unique circumstances. Finally, I said we could not and would not lose sight of our operational performance. And I think the results of the second quarter show that we have kept our focus and discipline even during a time of significant change. So let me now turn to those results. At the group level, we delivered net sales from continuing operations of €2.9 billion, a 44% non-IFRS gross margin and a non-IFRS operating profit of €347 million or 11.8%. Of course, the group level results reflect the performance of our three distinct businesses, and I will cover each of those today. I will spend most of my time on Networks, as I know some of you have questions about its strong margins and what they imply for the future. Networks, which comprises our mobile broadband and global services business units, had what was in my view an excellent quarter. We showed very clearly that we could improve our topline performance, while still delivering strong profitability. This is, as I think you know, no small achievement in our sector. And we believe that we continue to outperform the competition on a number of metrics. While Timo will cover cash performance, let me provide some perspective on other key areas. Second quarter net sales for Networks at €2.6 billion were down year-on-year. But when you adjust for currency fluctuations as well as divestments and country and contract that's consistent with our strategic focus, the business would have actually grown by 1%. Pleasingly, net sales in our mobile broadband business unit were up 6% year-on-year. This performance was driven by strong sales not just in LTE, but also by double-digit growth in core sales, which typically are more profitable than radio. In recent quarters, we have seen our core solutions, including those in fixed mobile convergence, gain increased traction in the market. We still have work to do to get global services back to growth after our many contract exits during the last two years. That said, I am confident we are making progress. Take the example of managed services. We can now say that Nokia Networks is very much back in the managed services business. We have won 10 new managed services deals this year. And while that is less than at least one of our competitors, we remain disciplined about limiting our efforts to those contracts where we can generate significant value for our customers and an adequate return for ourselves. We like managed services and can operate very effectively in this business without excellent global delivery centers, but are happy to leave to others those deals that do not make sense to us. On a regional level, two out of our six regions, Asia-Pacific and Greater China, were back to year-on-year growth, and all regions grew sequentially. The large LTE rollouts in China are proceeding well for us. And we believe we have won the largest share of those rollouts of any foreign vendor. Europe, which has been a difficult region for us, declined year-on-year. That said, we believe that momentum is coming back. The value of new deals won this year was well above that for the same time last year. Our customer satisfaction scores have improved. And our technology is strong, as shown by our recent delivery of telco cloud-based Voice over LTE services to three major customers in the region. North America was largely between major rollouts, although Sprint deployment activities are likely to accelerate in coming quarters. As we transformed our business in the Middle East and Africa, we saw a decline in net sales on a year-on-year basis, but in recent quarters, our deal momentum in the region has strengthened significantly. Latin America remains our most challenging region, partly a result of regulatory changes in Mexico, but also partly due to our earlier overreliance on services in the region and high impact of exits from those projects during our transformation. We are working hard to turn the situation around, but no one should expect an immediate rebound there. We believe that demand for our Networks products and services was slightly higher than we were able to deliver, as we continue to face some component shortages in the second quarter. While I recognize that some of our customers are not yet satisfied, we are making progress and the trend improved from the first quarter to the second. If you look at the progress in Networks over the last three quarters, we have shown a consistently better topline trend, have slowed the rate of decline and now expect to return to growth. Non-IFRS gross margin was a very strong 38%. Operating expenses remained well under control, with a 10% year-on-year decline. And non-IFRS operating profit margin was an excellent 11%. In addition, we had positive operating profits on a reported basis for the eighth consecutive quarter. This performance bodes well for the future. And as you will have seen from our press release today, we expect the full year 2014 non-IFRS operating margin for Networks to be at or slightly above the high end of the targeted long-term non-IFRS operating margin range of 5% to 10%. While this shows optimism, we continue to take a balanced view for the second half of 2014, given that some of the expected sales increase will come from the strategic, but margin-dilutive deals that we have mentioned previously. Overall, it is my view that these results showing a good balance between growth and profitability are being driven by our unique operating model and strong emphasis on execution excellence and continuous improvement. Part of this includes an ongoing focus on our cost position, which we believe gives us flexibility in the market. Now even if the major restructuring in Networks was completed at the end of 2013, we continue to be relentless in driving waste from the system, so that every euro we spend is invested as efficiently as possible. We have specific programs underway in a number of areas, including deploying lean and Kaizen methodologies across the company and increasing automation. We believe that our cost effectiveness is one of our most powerful competitive advantages in Networks, and we will not lose sight of that in the future. Let me now turn to HERE, which is also making progress, consistent with the goals for the business that we have discussed in the past. Net sales of €232 were roughly flat year-on-year, partly reflecting lower revenue from the former devices and services business. Non-IFRS operating margin was at the breakeven level, reflecting our continued investment in future growth opportunities. In the second quarter, we saw some positive signs. HERE's leadership in the Connected Car space continued with automotive-related sales up year-on-year. In the market for embedded navigation systems, HERE grew unit sales of new vehicle licenses by 22%. Quite simply, more new cars are driving out of the showroom with HERE Maps onboard. Enterprise sales remained small, but we see potential in this area and added some new deals in the quarter, including with companies such as Accenture and Teliasonera. The HERE location platform is also being used to power the recently announced Amazon Fire Phone, which we think is an exciting development. As I said on the last call, our focus when it comes to HERE is on making the right near-term investments to capture longer-term growth opportunities. As I have immersed myself in the HERE business over the last 100 days, my view on the importance of these investments has not changed. I do believe, however, that HERE could benefit from some further operational efficiency improvements that could expand overall R&D capacity and enabled investment in new areas. As we take steps in this direction, we will do so prudently to ensure we maintain our focus on growth. Then on to Technologies, where the biggest news is the announcement we made earlier today that Ramzi Haidamus will join Nokia as the President of Nokia Technologies. Ramzi is the right person for this business in various roles at Dolby, his previous employer, he built very strong intellectual property and technology licensing activities, while also playing a key role in incubating and growing new businesses. He will join us in early September and I'm looking forward to his contribution to taking the performance of our Technologies business to the next level. Paul Melin, who runs our IP licensing activities, remains in place and he will report to Ramzi. While we have a strong intellectual property business today, we continue to believe it can be better now that we are no longer in the devices business. This belief is strengthened when we see at least one major competitor generate more IP revenues even with our view is that our industry-leading portfolio is the result of both broader and deeper investments in mobile and adjacent technologies. I know there're a number of questions about what we will do in technologies in the future beyond the licensing business. Some of you may have seen us experimenting with a publicly-available beta of what we call the Z Launcher, which provides a constantly learning predictive interface for Android phones. While we continue to look at many options, we do so in a methodical way and will not be rushed into providing a definitive answer in any direction. Ramzi will continue the assessment process as well ensuring we maintain our venture capital-like funding model. That way, we can minimize risks, while also keeping the spirit of innovation alive. Before turning to Timo, I will just close by saying that my first 100 days have strengthened my confidence in our future. We have shown that we can balance topline and profitability well in Networks. There are opportunities for both growth and efficiency improvements in HERE. We can license our intellectual property to new customers and expand agreements with existing ones over time and more. With that, Timo, over to you.

Thank you, Rajeev. I would like to start by spending the next few minutes taking you through our cash performance during Q2 as there were quite a number of significant drivers that impacted our cash flow and quarter-ending cash balance. On the Microsoft transaction, last quarter I provided an initial estimate of the purchase price adjustments relative to the original €5.44 billion total consideration as well as estimates for other transaction-related items. In total, we estimate that the net proceeds from the transaction would add approximately €5 billion to Nokia's net cash. When we confirmed this estimate in today's release, due to the timing of certain payments, the net proceeds received in Q2 added approximately €4.8 billion to Nokia's net cash, with the remaining balance expected to be received during the second half of 2014. On a sequential basis, Nokia's gross cash increased by approximately €2.2 billion with a quarter-ending balance of €9 billion. Net cash and other liquid assets increased by approximately €4.4 billion sequentially, with a quarter-ending balance of €6.5 billion. Compared to Q1, the primary driver of the increase in our net cash balance was the €4.8 billion benefit from the Microsoft transaction, partially offset by approximately €400 million of cash outflows, of which approximately €300 million related to continuing operations and €100 million related to discontinued operations. Looking at approximately €300 million cash outflow from continuing operations, this was primarily driven by two factors. Approximately €400 million of cash outflows related to net financial income and expenses, which included cash outflows related to the early redemption of Nokia Networks borrowings as well as net cash tax outflows and capital expenditure, and approximately €100 million of cash generated from operations primarily related to Nokia Networks, where strong underlying profitability was partially offset by cash outflows related to net working capital. The cash outflows related to net working capital were primarily due to incentive payments related to its strong performance in 2013, an increase in inventories and approximately €90 million of restructuring-related cash outflows, partially offset by an increase in deferred revenues and payables. The discontinued operations cash outflows of approximately €100 million were related to the period between the end of Q1 2014 and the closing of the Microsoft transaction on April 25th. In addition to the factors affecting Nokia's overall net cash in Q2, gross cash was impacted on a sequential basis by the repayment of the Microsoft convertible bond as well as the redemption of materially all of Nokia Networks debt during Q2. Then a few words on OpEx. Continuing operations non-IFRS OpEx of €940 million in Q2 declined by 7% year-on-year and was up 2% sequentially. Nokia Networks benefited from continuous improvements in its cost structure with a strong focus on quality and efficiency. And this kind of stands out even in technology market. Quality and efficiency are as important differentiators of innovation. And we think we have the right formula. Non-organic non-IFRS research and development expenses declined by 9% year-on-year. Spending in growth areas such as LTE, small cells and liquid core increased by 9% compared to the year-ago quarter. To be clear, we are investing and will continue to invest in R&D in the focus areas. With regards to HERE, as we have said over the last couple of quarters, we are investing to capture long-term transformational growth opportunities. We believe that the automotive market has strong underlying growth trends that we can capitalize on as penetration of navigation systems continues to increase and cars become connected to the cloud. We believe that these trends coupled with our industry-leading asset, deep customer relationships and next-generation investments position us well for growth, which is a priority for us. In addition, the revenue headwind related to our former devices and services business will continue to lessen for HERE compared to recent quarters. Turning to the OpEx trends in Nokia Technologies, where we are investing in both patent creation as well as supporting our licensing efforts. On a quarterly basis, OpEx is predominantly impacted by the timing of R&D projects as well as certain costs related to our licensing activities. These then fluctuate as we invest in new projects and negotiate new license agreements. Completing our OpEx picture, we also have costs related to Group Common Functions. On a non-IFRS basis, these totaled €33 million of SG&A in Q2. Note that in Group Common Functions, the SG&A is generally stable, but the other income and expense can fluctuate. And now a few words on capital deployment. During Q2, we received shareholder approval to pay both the ordinary and special dividends, totaling €0.37 per share or approximately €1.4 billion. As a reminder, these payments were made in early July, so please take this into account in your Q3 models. In addition, the Board also received approval to commence repurchasing shares after Q2 results. It is our intention to commence the two-year €1.25 billion share buyback program during the current quarter. Finally on the capital optimization program, as part of our plans to reduce debt by approximately €2 billion, we redeemed approximately €950 million of debt instruments during Q2 related to Nokia Networks. As previously stated, the debt reduction related to our capital optimization program is expected to result in annualized run rate interest savings on at least €100 million, and we are on track to achieve this. Looking ahead, as we stated in the outlook section of today's press release, we currently expect our quarterly net financial expense to be approximately €40 million per quarter, subject to changes in foreign exchange rates, which are difficult to predict, and the amount of debt we have on the balance sheet. After taking the actions during Q2, Nokia no longer has material financial covenants in any of its financing instruments or activities. Now a few words on the acquisitions we announced during Q2. As part of our efforts to effectively deploy capital, we look at acquisitions primarily in two ways: first, as a way to add certain specific technologies or expertise to gain speed versus our own internal development; second, as a way to bring in products which we can leverage more broadly in the rest of our businesses and sales channels. We continue to have a very fragmented and rational approach as it relates to value creation through strategic transactions, a process we have applied to the benefit of our shareholders in recent time. Earlier, Rajeev mentioned the acquisitions we announced in Q2. We believe all of these announcements are consistent with our M&A approach and our commitment to effectively deploy capital. In closing, I'm pleased with the progress we have made in Q2, having closed the transaction with Microsoft at the end of April. We delivered a strong quarter, particularly in Networks, and are highly focused on capitalizing on the value creation opportunities we see ahead of us across all of our three businesses. And with that, I'll hand over to Matt for Q&A.

Thank you, Timo. For the Q&A session, we'll extend the time a bit. Thank you for bearing with the technical difficulties. But please limit yourself to one question only. Carmen, please go ahead.

(Operator Instructions) Your first question is from the line of Sandeep Deshpande with JPMorgan. Sandeep Deshpande - JPMorgan: My first question, Rajeev, is you clearly seem to be indicating that you're going to grow in the second half of the year. Do you have the contracts already in terms of growing in the second half of the year? And given that historically it's been a problem in this segment that when companies grow, their margin comes down. Can you make a comment on both revenue growth and the margin trends please?

So the way we do it is we have a methodical way of following our funnel that converts to our order backlog and then you look at what are the high probability orders in play and then of course some of the software businesses and some smaller deals you win all the time during the quarter. So we have a very methodical way of looking at that funnel. So yes, some orders we have already in place. Some others are constantly being won. But I think what gives us confidence, why we said that we expect second half growth, is because of the deal momentum. We have China. It's robust already in the first couple of quarters. We see significant deal momentum, as I already commented, in the business out of Europe. And other places that are going into capacity. Now we've also said that we see a new (inaudible) deployment projects coming through in the second half as well. Overall on the question of balancing growth and profitability, our track record recently suggests that we've been able to reduce the rate of decline of revenue, whilst balancing profitability as well. I continue to be a believer in a standard-based industry, where your lean cost structure is a huge advantage. And the fact that our operating model, how we mitigate risk, how we manage pricing, how we have our pricing volumes in place, the bidding process and so on, so this operating model and how we manage the business together with the cost structure gives us the benefit of being able to get some more flexibility in the market as well to drive for the strategic deals that we might have not taken in the past. That might have dilutive impact in the near term, but certainly have long-term better profitability profile. So based on that, we have the guidance out there that we expect to have growth in the second half, whilst improving the guidance for the year for margins as well.

And your question is from Gareth Jenkins with UBS. Gareth Jenkins - UBS: So I guess just a quick on the detail around the Networks on the products business. I wonder if you could give us a sense of the split along software capacity expansion network rollout business in the last quarter and what your expectations are going into the second half of this year and really into next year. Are we into kind of optimization mode where we'll see margins continue to be robust over a multi-year period, or should we expect network rollout to come back?

I think that this clip between capacity and coverage and software and rollout, there is no global answer of this. It would be a huge oversimplification to give one global answer to that. So just one example, like in LTE, we are in the capacity mode right now in Korea and Japan in wide-band CDMA 3G. We have been in the capacity mode in Korea and Japan for quite some time. In North America, we are in capacity in some customer segments, but other customers are actually going into coverage, because like I said Sprint is yet to roll out. China is in coverage mode in LTE, but there's been capacity for a long time on GSM and in fact on wide-band CDMA with one of the customers. So it's a hard global answer to give except to say that there's always balance and that's actually the unique advantage of playing the capacity cycle while you have the coverage cycle that can drive revenue in the medium term. So I can't give you a global answer on that. We don't break out our revenues in that manner. We follow the methodology in a detailed way on the regional basis, but there's no one single answer to that.

Your next question is from the line of Francois Meunier with Morgan Stanley. Francois Meunier - Morgan Stanley: The comments you made about the margins during the quarter, you said that the margins were hit because you had more call phase than waiting on this around. So can you explain if it's evolved like it could, if it's software? And the second question relates to the patents business where you've hired a new guy there. Does that mean that you're going to be investing more in R&D so that this business is more sustainable long term?

First of all, it's important to remember that we were within what we guided for Q2. So we said that there'll be lower software sales. We said that MBB was lower margin sequentially compared to the first quarter and global services was high margin. So we had more coming from network implementation improvement in margins and also [CAD]. On the question within mobile broadband, yes, we had greater traction market and more deal momentum on core. And core sort of typically depends again on the regions, but I would say some regions it was third-generation core and some regions it was next-generation core. It evolved back at core IMS in some of the telco cloud over Voice over LTE. On the question on Technologies, Ramzi is a great addition to the team, comes with a unique plan of licensing experience, which has to do with technology licensing as well as standards essential patent licensing in that industry, but also driving a startup and incubatory experience. So I think what we're saying through that appointment is that we have a strong business leader in place. We'll drive licensing. Like I said, I see more opportunities in licensing. I also see more opportunities in moving to implementation patent licensing. But it also means that we will be investing in some of the incubation of new products. We're not specifically pointing to any OpEx increases, but we have a good run of patents being generated this year as well. So, so far we've done hundreds of patents and we're very pleased with the ability to continue to sustain our portfolio and generate patents all the time.

Your next question comes from the line of Stuart Jeffrey with Nomura. Stuart Jeffrey - Nomura: I've got a question again on the margins and business mix. Historically I've always thought an industry that contracts fund in the last 18 months, obviously much lower margin than ones of historic order contracts. And certainly some of your competitors have spoken about a normal mix being 30% revenues from recently signed contracts and 70% from longer-term ones. So I guess over the last couple of years, I'm assuming that your mix has been much more focused on longer-term contracts. It's swinging towards newer contracts as we go to the second half. But could you comment on where you see that bounce relative to what you think is a normalized level of new versus older contracts? Were you 90% order contracts over the last couple of years and are you going to normalize the level now? Or do you think the next couple of quarters will see you go to a much higher than normal level of new contracts than what you think is sustainable long term?

Again, a global view of this can be somewhat of an oversimplification, because you take managed services. They're typically annuity revenue contracts of five years. Care is a contract for at least one year, sometimes greater because that's a maintenance business. So it's annuity. Then you look at system projects. They are long term. Core projects are typically shorter term, because they're driven by system integration. So again, there's no one global answer to this. We have a mix of longer term and we have some new contracts all the time, because again going back to my analysis of the funnel, you never start the year with 100% long-term or 90-10 or anything like that. You have a mix. You win some through the year. You already have some from the previous year. So I'm afraid I can't give any more color than that except that I actually don't think it's a good idea to try to model this on a global basis. One has to go much more in detail region-by-region.

Your next question is from the line of Alexander Peterc with Exane BNP Paribas. Alexander Peterc - Exane BNP Paribas: It's certainly now your customary caution in Networks guidance. What's holding your predictions back actually well below numbers that you print quarter-after-quarter? And which part of your business over the past six quarters in particular do you see is not recurring? Would you help us understand your very large and conservative long-term margin guidance in the Networks?

I don't think we can split it that way. And of course we try our best to give the right guidance to the market. But if we look at the longer-term guidance, first of all, it's worth noting that we have not given any annual margin guidance beyond 2014. We believe though that we have created sustainable improvements to our operating model in the Networks business. But however, this business has not yet turned to growth, as Rajeev was talking about. We are expecting it to grow year-on-year during the second half of 2014, and we need to continue to assess the right balance between our growth ambitions and profitability. So we have no change to our long-term non-IFRS profitability target of 5% to 10%.

Your next question is from the line of Tim Long with BMO Capital Markets. Tim Long - BMO Capital Markets: Just a question on the Technologies business. Understanding there is a change in leadership there, we've been running at this €600 million run rate. I guess it was €500 million before, but you had the Microsoft benefit for this year. Could you just talk a little bit about the timing of when you think that could start to show some growth to it? And related to royalties, can you just give us a sense in that revenue stream how important are the Chinese OEMs and do you foresee any potential collection issues with your Chinese partners on the licensing side?

China can be a difficult market for IP in general and IP compliance. And we work with the government to address issues when and where we see them. I'd just note that unlike some other companies, our licensing practices are not under investigation in China.

Basically, that means that this China thing, which is now being discussed quite broadly, is not having an impact to this €600 million run rate number what we have given to the market. And as we have said earlier, we are working hard to drive more value on all of these areas what we have been discussion in IP business, i.e., new and re-amends with existing licensees in standard SSO patents, getting new licensees to our standard essential patents program and also driving value from our implementation patents. But you also need to respect the fact that these negotiations take some time and also the fact that if you don't come to a resolution, let's say, in a negotiating manner before getting to a some kind of revenue situation, it can easily take a year after that. So yes, we're working hard in these areas. But we have no update to give to the €600 million run rate.

Your next question is from the line of Andrew Gardiner with Barclays. Andrew Gardiner - Barclays: I was just wondering if you could provide a little bit more detail around some of the regional trends you mentioned in Networks. Firstly on China, clearly a good start to the year, getting ahead in 4G. But there's been some talk by others in the supply chain that there's a pause in the 4G deployment in the back half of the year. You conversely sound very confident in way things are going. So I'm just wondering if you can help shed any light on the disconnect and what others may be seeing that you're not. Also on Middle East, you're highlighting some new network deployments there. Is that something you've got visibility into continuing through the back half of the year in the Middle East?

I believe that we won largest foreign vendor share in the LTE rollout. So we have good momentum there. And second on Middle East and Africa, all together, remember we've transformed this business. We used to be in many countries. We then shrank. We decided to focus on specific countries during our transformation phase. And now we're extending ourselves in some other countries where deals might be lucrative and so on, because we really fixed the cost base and the team and the dynamics there. And so we're now experiencing good deal momentum in Middle East and Africa, as I commented also in my opening remarks. I didn't really get your question on the issue of supply. But my sense is it might be something to do with component shortages. And if that's the question, then yes we also experienced some component shortages with regard to especially some gating factors on some particular comments that delay the modules. And if it's an industry-wide perspective, that of course came from the fact that China demand went up during the beginning of the year, which was not forecasted till the end of last year as an industry. And we're working through that. We had some impact in Q2, but seems that we're getting back on track.

Your next question is from the line of Richard Kramer with Arete Research. Richard Kramer - Arete Research: Rajeev, the current management of HERE has been promising growth now for a number of years during this transition from internal to external sales. Can you talk through some of the ways you see Nokia growing here and monetizing its Maps assets without having a scale internet advertising business? And would you look at monetizing the extensive IPR that's sitting within Maps? And then maybe a quick for Timo. Given the €6.5 million base of net cash with the dividend outpayment and some adjustments coming from Microsoft, should we expect that Nokia is going to have a large positive operating net cash inflow in the second half of the year to cover the buyback and to segue up for the 2014 dividend payment?

For HERE, one, we see that the growth opportunity comes from, first of all, extending our position in automotives. So the in-dash navigation system penetration will grow globally moving up the stack to capture more of the Connected Car space. Also, they're putting advantage of the ASPs rising and moving steadily into the enterprise. And we've had a few good wins in the enterprise business. And then also going to the consumable business, again the licensing-driven approach, in some way going up the stack and sometimes just content depends upon the particular business model. Fundamentally, there's a huge barrier to entry of this business. You need to spend a lot of money cumulatively. You need to maintain the investments and mapping and so on. I feel good about the asset. I feel therefore that if you're spending this amount of R&D, the best way to get operating leverage is to get more revenue in adjacencies. And hence, we're moving to the enterprise and to the consumer space. And so far so good. And we're also improving the platform by way of getting more predictive. So we made an acquisition in that space. If we look at a lot of the industry analysts' reports, we learn that our mapping solution is most complete, most fresh, fairly accurate. And we have some areas to develop such as in semantic and local search which we did through also the Desti acquisition. Some of this wash-through of the devices services driven revenue was stopped to kind of normalize over time. And of course the good news is that external sales due in Q1 and then automotive sales were up in this quarter as well, Q2 as well.

And on the cash question, so basically what does the cash look for the second half, so clearly we've not given any cash guidance as such, but I can talk about some of the drivers impacting the cash during the second half. So first of all, we have the €1.4 billion on dividends. We have also said that we will start the buyback program during the half. We have some restructuring-related outflows, about €150 million, we said in the release, related to Networks restructuring. We also have the positive €200 million, we are expecting, still related to the Microsoft transaction. Rajeev mentioned that we have done or announced five acquisitions. There are some acquisition related cash outflows. And then of course there is the operating performance. And basically those are really the drivers of the cash. I mean regarding possible future dividends, we are now just in the beginning of executing our program regarding the capital structure. And in that sense, the only thing we have said about the dividend is that the Board is proposing same level at least as this year.

Your next question is from the line of Mike Walkley with Canaccord. Mike Walkley - Canaccord: A question on the licensing business. I imagined we might learn more about longer-term licensing business at the Capital Markets Day. A lot of your deals are cross-licensing deals. And it's my understanding that some of the top 10 handset OEMs you have an initial license with. Have you already started to contact some of these potential handset OEMs to start the process, given it'll take time to negotiate? Or is it you're waiting to for the hired here, Ramzi and his team, create a strategy before you start contacting unlicensed OEMs?

No, we are actually looking not to doing deal. We are absolutely both on the people who are not licensees, our standard essential patents. We have definitely contacted and have actually been in contact with them earlier. Now of course the dynamics of the negotiations might be slightly different. But on top of that, we are in constant negotiations with also smaller people and also people who are not necessarily on the mobile space on some other licensing activities as well. So we do not announce every single deal, what we make on the licensing side either if it's not material. So we are of course working as hard.

Your next question is from Ehud Gelblum with Citigroup. Ehud Gelblum - Citigroup: First question on the operating margin guidance now, you beat it soundly in the Networks side for two straight quarters. At what point in the quarter, did you realize that the core was going to be stronger and the operating margin was going to beat by as much? Is it something that happened late in the quarter? Why didn't you have the visibility? I'm just trying to understand what changed in the quarter that didn't give you the visibility heading into either Q1 or Q2 that ended up coming in the way it did? Was there some pull-forward of core revenue perhaps, which is why you're a little more cautious on the second half? And then on the HERE business, I understand the opportunities that are going there are exciting. But can you go over again with the synergies between HERE and the rest of the business or is it viewed more as a standalone business that you're kind of looking at from a venture perspective? And would you consider floating a percent of that out in the market, so there is a minority interest out there, so that people can actually understand a bit more and perhaps help you assign some sort of a value based on just understanding the actual traded instrument, keeping it totally on inside?

We did not have any other guidance outstanding for Q2 than the software sales portion of the guidance, and that clearly came through. And as Rajeev said earlier, we actually sequentially had lower margin in mobile broadband and then we had higher margin in global services. So it was really looking at that equation than more on the global services side. I don't really have a comment on this visibility question. I mean again, I think we were in line with the guidance what we gave to the market regarding Q2.

Just on the HERE question, we see opportunities to create shareholder value. I think we're a good owner of HERE. We have the ability to make the right long-term investments and we're also able to address multiple players in multiple markets with our flexible business model. We're more flexible with our approach. We can sell the platform, the contents, the services depending upon the customer. And the automotive sector is strong and trends up really to what's greater adoption of embedded solutions for intelligent cars. And in the future, we also have the potential to expand ASPs. And as I said, we can move into the enterprise and also in the consumer selectively. In terms of synergies, no, it's a standalone operation. And we believe the Nokia Business System that I articulated is the one that will be the glue amongst the three businesses where we have set up industrialized best practices that we will leverage across the group. And in terms of our vision, I think if you look at the future, the HERE business will be more converging with the rest of the businesses than (inaudible) in the next few years.

Your next question comes from the line of Kulbinder Garcha with Credit Suisse. Kulbinder Garcha - Credit Suisse: Just on the guidance, saw the indication that margins will go down in NSN in the back half. I guess I'm thinking about it this way that you have China run quite meaningfully over the last few quarters without any noticeable significant impact on your margins. So does the indication decline in the back half, there's just so many strategic happening at the same time? And then what's kind of linked to that, as okay is this impact of dilution maybe on margins in the back half? How long is it typically that we should assume before (inaudible) lesser the average that NSN in joining today, or will that not happen? The concern investors have, Rajeev, is as you go from revenue decline to revenue growth margin structurally come down, not just temporarily, but structurally. So any comments around that context would be very helpful.

If you look at our first half, I think the margin on the average comes to just slightly above 10%, so maybe 10.2%, something like that. And if you look at our guidance, I don't think you can directly read from that guidance anything about it being below the first half or something like that. So we're simply saying towards likely above our long-term guidance range of 5% to 10%.

As I noed in my remarks, I think it's important to understand that we are believers in what we call disciplined expansion. And we will continue to work to minimize the impacts of these margin-dilutive deals. And we only take these deals if and when they have long-term good profitability profile. And how do we mitigate, we have ongoing cost tractions, we have upsells. And we also have overall for the rest of the deals a very disciplined approach to the bidding process. Again, I pride ourselves on the ability to drive these pricing [warlooms] and we can sort of control pretty much all the deals in the company go-through pricing where we utilize our global understanding and benchmark pricing to a specific pricing designed originally for this purpose. So you combine the pricing approach, the unique operating model, the way we mitigate risks and the disciplined expansion, and I think we can continue to balance this growth in profit thing.

Your next question is from the line of Mark Sue with RBC Capital Markets. Mark Sue - RBC Capital Markets: Historically the focus on the business has always been in terms of operating margins. But overall, Rajeev, think about you don't have the volatility of the smartphones. Should we now think about our OpEx in absolute terms since we have scale in Networks. I remember Networks used to be 0% of (inaudible) improvements since then. And you do have a lot of costs coming out and you're redirecting some investments in here in advanced technologies. So should we start thinking about the business from steady operating expenses in absolute euros working capital requirements and just also better cash conversion?

That's first of all a good point and I think one point what Rajeev has made also I made that basically really finding this right balance between growth and profitability. Of course we need to really managing the absolute euros and not percentages, which is the key in business, because it really is ultimately the cash what we want to generate. Now we have less volatility overall in the business situation and that will allow us to put even more focus on the cash side. Of course we have been very focused on that going forward as well particularly.

Your next question comes from the line of Pierre Ferragu with Bernstein. Jasmeet Chadha - Bernstein: This is Jasmeet Chadha standing for Pierre. I had a question on service gross margins that improved sequentially this quarter. My question was how much of this improvement was driven by efficiency improvements? Was this is a better mix as you have introducing activity in that business? And then I would like to understand how does that evolve for the rest of the year. And finally if you can make a quick comment on where the service gross margins are today versus they were two years ago? Are they up 5 points, are they up 10 points?

Global services in the quarter was driven by better margins coming from network implementation and care. But you brought a question on global services and I think it's a business that's now run very efficiently. Yes, there's some effects from contract exits, but that effect has coming through now for this last several quarters. And for a number of quarters now, we've had reasonably good almost best in class levels of operating margins for global services. So that efficiency will continue. As I commented in my remarks that we will focus on automation and through that lean and Kaizen programs, we will continue to focus on driving more of our services activity through global delivery centers, which are standards-driven, process-driven and they're offshore and lower cost centers. So that's something that's just a given for the global services business. I think, again as Timo had said, we found the formula in terms of how you run a global services business for efficiency, whilst still driving for growth. And now that the mobile broadband equipment business has come to growth, the attached part of the business of course follows the mobile broadband business at some point with a certain lag also starting to grow.

We have now used our time for this quarter for the Q&A session. So ladies and gentlemen, this concludes our conference call. I would like to remind you that during the conference call today, we made a number of forward-looking statements that involve risks and uncertainties. Our actual results may therefore differ materially from the results currently expected. Factors that could cause such differences can be both external such as general, economic and industry conditions as well as internal operating factors. We have identified these in more detail in the Risk Factors section of our 20-F for 2013 and in our Interim Report issued today. Thank you.

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