Nokia, the telecom equipment maker, saw a rally in its shares on Thursday, despite its sales falling short of estimates. The stock jumped 7% in Helsinki as Nokia reported a loss of €33 million, accompanied by a 23% decline in revenue to €5.71 billion. However, on a comparable basis, the company announced that it would have earned €568 million, a decrease of 39%. Analysts had predicted an adjusted profit of €659 million on sales of €6.27 billion, according to Visible Alpha.
Positive Signs Amidst Economic Uncertainty
Similar to Ericsson, Nokia attributed the pressure on operator spending to economic uncertainty. Nevertheless, the company highlighted signs of “green shoots” in the market. Despite the revenue miss, Nokia’s gross margin was praised by investors. It only experienced a slight decline of 0.4 percentage points to reach 43.1% on a comparable basis. This was due to improvements in mobile networks and cloud and network services balancing out a decline from its technologies division.
New Stock Buyback Program Announced
Nokia also revealed a new stock buyback program worth €600 million over the course of two years. Additionally, the company provided guidance for a comparable operating profit ranging between €2.3 billion and €2.9 billion, aligning with analyst estimates.
However, Andrew Gardiner, an analyst at Citi, maintained a sell rating for the company with a target price of €2.7. He stated, “Nokia is taking the right steps in terms of further cost cuts, but it is now facing a more challenging situation than expected in December.”