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Home / Business / Nokia lowers its full-year profit forecast and develops a new strategy

Nokia lowers its full-year profit forecast and develops a new strategy



Nokia lowered its full-year profit forecast on Thursday, although the telecommunications network equipment manufacturer’s quarterly basic profit reached the first profit forecast under the leadership of the new CEO Pekka Lundmark.

The Finnish company also announced a new strategy under which it will have four business units starting in January: mobile networks, IP and fixed networks, cloud and network services, and Nokia technology.

The company lowered its full-year profit forecast range by 0.02 euros to a midpoint of 0.23 euros per share.

Lundmark said in a statement: “We expect to stabilize our financial performance in 2021

and gradually improve towards our long-term goals thereafter.”

The company expects that by 2020, its network and software businesses will not perform as well as major markets outside of China. Earlier it was expected that its performance would be slightly worse.

As more and more telecom operators begin to roll out 5G networks, Nokia and its Nordic rival Ericsson (Ericsson) have won more customers, and due to security considerations, more and more governments have turned to China’s Huawei (Huawei) avoided.

However, Nokia suffered a setback in the third quarter because part of its contract to supply 5G equipment to Verizon was lost to Samsung Electronics.

Lundmark said: “We have lost the share of a large North American customer, see some profit pressure in this market, and believe that we need to further increase R&D investment to ensure our leading position in 5G.”

The company lowered its operating profit margin in 2020 from 9.5% to 9% and expects an operating profit margin of 7-10% in 2021.

Competitor Ericsson announced last week that its quarterly profit was higher than market expectations, thanks to higher profit margins and the launch of China’s 5G, and expressed “more confidence” in achieving the 2020 target.

Unlike Ericsson, Nokia has not won any radio contracts in the highly competitive Chinese market.

Due to the weak service business, its quarterly revenue also declined.

Nokia said that its basic earnings per share from July to September was 0.05 euros, which was the same as the same period last year, and reached a consensus of 0.05 euros in the Refinitiv survey.

(Reporting by Supantha Mukherjee in Stockholm and Anne Kauranen in Helsinki; Editing by Aditya Soni and Keith Weir)


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