\n
![](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/07\/GettyImages-1240871571-e1721299585272.jpg?w=2048\")
<\/p>\n [ad_1]
\n<\/p>\n
Nokia Oyj sales in the second quarter were the lowest of any period since 2015 and missed analyst estimates, as weak investment in mobile network upgrades continues to hobble the 5G equipment market.\u00a0<\/p>\n
Net sales declined 18% to \u20ac4.47 billion ($4.9 billion) in the quarter from a year earlier, the Espoo, Finland-based company said in a statement on Thursday. The revenue figure excludes its undersea cable business, which it is selling. It compares to an average \u20ac4.76 billion forecast by analysts surveyed by Bloomberg.<\/p>\n
Nokia shares fell 9% to \u20ac3.26 at 10:28 a.m. in Helsinki. \u200b\u200bThe stock has risen 6.7% so far this year.<\/p>\n
Nokia and its Nordic competitor Ericsson AB have faced a dismal telecom equipment market for years with few signs that mobile operators are going to invest big in 5G equipment anytime soon. Both companies have slashed thousands of jobs in the last year and streamlined operations to save costs.<\/p>\n
The weak telecom equipment market has pushed Nokia to make major changes to its network infrastructure division, such as\u00a0a $2.3 billion bet<\/a>\u00a0on artificial intelligence-driven demand for data center services with the purchase of Infinera last month. It also plans to sell Alcatel Submarine Networks, its undersea cable business, to the French government.\u00a0<\/p>\n \u201cThe order backlog is growing and that\u2019s obviously a factor that we are seeing\u201d contributing to an improving dynamic, Nokia Chief Executive Officer Pekka Lundmark said in an interview. \u201cNo question volumes are extremely weak at the moment when you look at the top line.\u201d<\/p>\n Revenue in the period was the lowest since the fourth quarter of 2015, before Nokia\u00a0acquired<\/a>\u00a0Alcatel-Lucent for \u20ac10.6 billion, according to data compiled by Bloomberg.<\/p>\n What Bloomberg Intelligence Says:<\/p>\n Nokia\u2019s cost-cutting progress is keeping the full year \u20ac2.3-\u20ac2.9 billion comparable operating profit goal within reach (consensus \u20ac2.5 billion) even though its top-line recovery is taking longer than expected to materialize on mobile carriers\u2019 muted 5G spending. Analysts\u2019 expectations for a 5% slump in 2024 organic sales may be too optimistic, given the 19% decline in 1H. \u2014 Tamlin Bason, Bloomberg Intelligence Technology Analyst<\/p>\n Adjusted operating profit was \u20ac423 million in the quarter, beating an average analyst estimate of \u20ac372 million. Nokia reconfirmed its 2024 profit forecast.\u00a0<\/p>\n \u201cWe have taken so much action on cost and as you can see when you look at the profitability side of it that, despite the top line weakness, we have actually been able to defend the profitability pretty well,\u201d Lundmark said.\u00a0<\/p>\n Both net sales and operating profit in the period were boosted by \u20ac150 million after settling an outstanding contract with US operator AT&T Inc., Nokia said.\u00a0<\/p>\n \u201cNokia reported a better-than-expected comparable operating result, but it was achieved with a large one-time item for Mobile Networks as a result of the termination of the AT&T contract,\u201d Inderes analyst Atte Riikola said in a note. \u201cExcluding this, the operational development of networks businesses was softer than expected.\u201d<\/p>\n The North American market is showing early signs of recovery, Lundmark said on a call with reporters, echoing remarks by Ericsson CEO B\u00f6rje Ekholm last week. Ericsson beat out Nokia for an $14 billion\u00a0network deal<\/a>\u00a0with AT&T late last year.\u00a0<\/p>\n<\/div>\nRecommended Newsletter: <\/strong>CEO Daily provides key context for the news leaders need to know from across the world of business. Every weekday morning, more than 125,000 readers trust CEO Daily for insights about\u2013and from inside\u2013the C-suite. Subscribe Now<\/a>.<\/div>\n