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Nokia is boosting its profit guide with a 5G song return plan

(Bloomberg) – Nokia Oyj folded its year-round profit guidelines after cutting costs and reviewing its products to catch up with competitors in the fifth-generation wireless network market.

The company expects diluted earnings per share of 0.25 euro cents plus or minus 5 cents compared to a previous forecast of 0.23 euro cents. Adjusted operating profit for the second quarter was 423 million euros, beating analysts̵

7; average estimates of 289.8 million euros according to Bloomberg-tracked estimates.

Key data

CEO Rajev Suri’s latest performance as CEO marks a low point for Nokia after it lost its position to competitors in 5G mobile networks, and the coronavirus cut supply chains and reduced investment. “Nokia-level revenue was down during the quarter, largely due to Covid-19 and China declining,” Suri said in a statement. “We expect that most of the sales missed during the quarter due to Covid-19 will be carried forward.” Its fortunes will improve as a new radio access base station returns it to the game of 5G and Huawei’s main competitor has been kicked out of key European markets by a US-led boycott. The company’s struggle may be one of the reasons Nokia is upgrading its guidelines. Nokia said it expects a slightly lower result than its main address market, with the exception of China. She had previously said she expected to perform in line with the market.

Market context

Shares of Nokia rose about 4% for the year after the end of Thursday. More analysts advise clients to buy stocks than they recommend holding or selling.

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Suri Pekka Lundmark is set to replace August 1 and a strategy review is expected to begin. Suri’s biggest move was to buy a competitor to Alcatel-Lucent in 2016, a deal that gave Nokia a broader product portfolio but required a complex integration process that analysts say distracted management just as the 5G race began. Nokia’s net sales in the second quarter fell 11 percent from a year earlier to 5.09 billion euros ($ 6.05 billion), compared to an average analyst forecast of 5.31 billion euros. Nokia reported an operating margin of 9.5% plus or minus 1.5 percentage points, compared to a previous average of 9.0%. See the numbers here. Nokia cuts 1,200 French jobs in former Alcatel-Lucent businessHow the Nokia deal with Alcatel came back in the pursuit of its CEO

(Updates with CEO comments under Key Insights)

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