Nokia’s shares fell 8% after reporting its lowest quarterly net sales since 2015.

(VOR News) – On Thursday, shares of Nokia, a Finnish telecom business, dropped after the company disclosed a decline in its operational profit for the second quarter that was around 32 percent lower than the previous quarter.

We were able to attribute this reduction to the fact that there was a dearth of demand for the 5G equipment that Nokia was producing.

By the time the market opened at nine o’clock London time, the stock of the business that is listed in Helsinki had already experienced a decline of eight percent.

Today, Nokia reported a comparable operating profit of $462 million.

This value was reported by the company. When compared Nokia to the 619 million euros that were recorded for the same period of time in the previous year, this implies a loss of roughly a third more than what was stated.

Data provided by LSEG indicates that the firm reported a decline in its net sales of 18%, bringing the total to 4.47 billion euros.

This Nokia represents the lowest level of net sales attained since the fourth quarter of 2015. This decline was attributed to “ongoing market weakness” by the corporation at the time of the decline.

“The most significant impact was the challenging comparison period from the previous year, which saw the peak of India’s rapid 5G deployment, with India accounting for three quarters of the decline,” Mr. Pekka Lundmark, CEO of Nokia, remarked in the announcement of the results. “The most significant impact was the challenging comparison period.”

Continuing along the same lines, he emphasized that the landscape in the mobile networks business continues to be “challenging as operators continue to be cautious.”

In spite of this, Nokia forecasts that the business situation will become “stabilizing” and that there will be a “significant acceleration in net sales growth in the second half” of the year. The order intake that was seen in the most recent quarter served as the basis for these forecasts.

According to the company’s CEO, “though the dynamic is showing signs of improvement, the recovery of net sales is occurring somewhat later than we had anticipated, which will have an effect on our business group’s net sales assumptions for the year 2024.”

Despite the fact that this has taken place, we are still well on our approach to fulfilling our full-year target, which is further supported by the early action that we have taken addressing cost.

The business continues to strive for a result that is either near to or slightly below the midpoint of its comparable operating profit prediction for the entire year, which ranges from 2.3 billion to 2.9 billion euros.

Nokia’s founders set this goal for the company.

AT&T, the largest telecommunications company in the United States, made the decision to select Ericsson as the provider for the construction of a telecom network that is completely based on a technology known as ORAN at the end of the previous year.

A severe blow was handed to Nokia by this decision, as the company had previously been awarded a significant contract in the North American market.

Both the Finnish company and its Swedish competitor, Ericsson, have initiated strong cost-cutting initiatives in the midst of an industry-wide fight against a slowing economy and infrastructure expenditure cuts from mobile carriers. Ericsson is a Swedish company that competes with the Finnish company.

The revelation that Nokia will be cutting off as many as 14,000 employees came in October, following the company’s realization that it had experienced a major decline in profitability during the third quarter.

By the year 2026, the company intends to achieve a reduction in its gross expenses of between 800 million and 1.2 billion euros within the time frame.

The business made the announcement on Thursday that it had made “significant progress” on its entire cost reduction program and that it had implemented actions with the goal of cutting expenses by a total of 400 million euros up to this time.

SOURCE: CNBC

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