Nokia shares slide tracking it misses quarterly profit calculations
April 21, 2023: On Thursday, Finnish telecoms significant Nokia posted quarterly operating profit that dropped short of market expectations.
The firm reported an operating profit of 479 million euros in the first quarter, down from 583 million in the familiar period in the previous year.
The number was less than a forecast of 532.4 million euros from analysts by Refinitiv.
Nokia said its comparable gross margin decreased 300 basis points to 37.7% from 40.7%.
This was “because of regional mix and a lower contribution from Nokia Technologies related to a license option exerted in Q4 2022,” Nokia said.
Nokia increased its net sales by 10% to 5.86 billion euros, better than the 5.72 billion euros such as by analysts.
“We have witnessed shifting in our regional mix. We had a slowdown in North America, but we had robust growth in India,” Pekka Lundmark, CEO of Nokia, said.
Shares of Nokia are tumbling sharply on news of Nokia’s revenue report, dropping over 8% by the close on Thursday.
Addressing the adverse share price reaction, Lundmark said it reflected disappointment in its technology licensing firms and a changing regional earnings mix.
That side of the firm had an annual run price of 1 billion euros, falling short of Nokia’s 1.4 to 1.5 billion euro target.
“Network infrastructure and mobile networks firms are doing fine, so we are talking regarding the technology licensing firms where we are close to a huge deal with Samsung in the initial quarter,” Lundmark said.
“We have ongoing litigations with Oppo and Vivo.”
Nokia saw a slowdown in its North American business, according to Lundmark.
“There was a lot of inventory depletion in North America because the investments were high last year,” Lundmark said.
“Our customers were building inventory, unsure we could deliver because of the component shortages, and currently, they are consuming some of that inventory.”
Still, Nokia’s India business experiences considerable growth thanks to solid sales of its 5G equipment.
“We had robust growth in India,” Lundmark stated. “India was 15% of the sales in Q1, whereas only 5% last year.”
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