Nokia Shares Plunge 15%, Sales Drop, Awaits 5G Launch
Shares in Finnish-based Nokia have plunged 15%, after the company posted a wider than expected third-quarter loss, and revealed a downbeat outlook for 2018.
Nokia was once considered the world’s largest handset manufacturer, however, has since sold its mobile phone business to Microsoft in 2014, and now focuses on patents and networks.
Operating profit from its networks business fell a notable 23% to US$334 million, which is significantly less than analyst forecasts for US$432 million.
Network sales dropped 9% to US$5.7 billion.
The telecomm equipment giant also revealed that it expects sales in its primary market to be worse than expects for the remainder of 2017, and projected a decline of between 2% and 5% for 2018.
Nokia’s Chief Executive, Rajeev Suri, attributes the downbeat 2018 forecast as “the result of the multiple technology transitions under way, robust competition in China, and near-term headwinds from potential operator consolidation in a handful of countries”.
The company hopes that its investment in cable and IT routing, as well as its diverse patent portfolio will enable it to better survive until 5G networks launch in 2019.
Speaking of the future outlook, and Nokia’s investment in 5G, Mr Suri states:
“The strategy to diversify is working. We are taking on the headwinds. We improved the gross margin in both technologies [patents and digital health business] and networks”.
He also affirms the company is “focused on long term shareholder value”.
Just like Swedish-based, Ericsson, Telecom equipment makers like Nokia have recently been facing their most challenging market conditions, cost cutting as they plan for the launch of 5G networks by the end of the decade.