Nokia in the Challenge: Revenue Decline and Positive Signals

The Finnish network equipment provider Nokia experienced an 8% decline in revenue in the third quarter compared to the previous year, amounting to an absolute figure of 4.33 billion euros. Analysts had expected revenue of 5.34 billion euros, which did not satisfy the markets and resulted in a drop in the stock price. In detail, the challenges are particularly apparent in the Indian market, while the company benefited from an increase in net profit to 175 million euros. This represents an increase compared to 133 million euros in the previous year. The comparable net profit also rose to 358 million euros. Regarding the individual segments, sales in the network infrastructure division showed a slight increase of 1%, whereas the cloud and network services division declined by 4%, with enterprise sales playing a role. A notable increase of 35% was achieved in the Nokia Tech division through new licensing agreements with smartphone manufacturers Oppo and Vivo. The margin development appears positive: the gross margin increased by 500 basis points to 45.2%, while the operating margin rose to 5.7%. Ongoing cost control significantly contributed to the increase in the comparable margin to 10.5%. CEO Pekka Lundmark is optimistic about the fourth quarter, but expects a more restrained market in the US following the loss of contracts with Verizon and AT&T. The focus will increasingly be on data centers and defense to ensure future growth. Overall, Nokia plans for the upcoming fiscal year to maintain a comparable operating profit margin of 2.3 billion to 2.9 billion euros. The outlook for the various business segments varies, with expected declines particularly in mobile networks and cloud and network services.