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Nokia Aligns with Ericsson in Anticipating Robust Second Half Following First-Quarter Profit Slight Miss.

The maker of telecom equipment in Finland, Nokia, revealed on Thursday a lower-than-expected increase in quarterly earnings as sales were still negatively impacted by the slow uptake of 5G equipment in important areas, including India and North America.

According to CEO Pekka Lundmark, this will still be a slow year for the mobile RAN (radio access network) sector, but we expect it to gradually improve over the course of the year.

Both Nokia and its Swedish competitor Ericsson, which also lost market share in China, were compelled to lower their expectations and fire thousands of workers in order to save costs due to a decline in the demand for 5G equipment in North America, their biggest market.

In an LSEG survey, four analysts projected a profit of 663 million euros on average.

After falling 3% earlier, Nokia’s shares reversed course and were up 1.5% as of 0801 GMT.

J.P. Morgan analysts stated in a client note that Nokia’s poor sales patterns were the reason for the earnings loss, but they also mentioned the company’s strong position for a comeback.

Despite ongoing market challenges, according to CEO Lundmark, an improvement in orders from late last year persisted in the first quarter.

Local-currency sales in the Mobile Networks sector, which records orders for 5G equipment, fell 37% in the quarter. Nokia said this was a low point for the year and that it expects a recovery in the remaining months of 2024.

Nokia predicted in January that demand would pick up in the second half of 2024. On Tuesday, Ericsson declared that its sales would return to normal in the second half.

Both in local currencies and net, the Network Infrastructure division’s sales decreased by 26%.

The sustainability of Nokia’s forecast appears to be under strain once more until the very end of the year, according to Inderes analyst Atte Riikola. “Overall, the softness in the early part of the year will put more pressure on the rest of the year,” Riikola said.

While financial instability, upcoming elections, and persistent geopolitical tensions continue to be major issues, Paolo Pescatore of PP Foresight noted that Nokia and Ericsson’s mid-to-long-term market confidence is positive.

Nokia reiterated its January forecast on Thursday, estimating a comparable operating profit of 2.3–2.9 billion euros in 2024.

The comparable gross margin increased from 37.7% to 48.6%.


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