Nokia Sees Revenue Drop in 2021 as It Fights for Market Share

(Bloomberg) — Nokia Oyj said it expects revenue to continue to drop this year as the telecommunications equipment maker battles share loss and falling prices for its products in some markets.

Sales are expected to be between 20.6 billion euros and 21.8 billion euros ($24.7 billion to $26.2 billion), the company said in a statement on Thursday. Analysts had predicted about 21.5 billion euros for 2021, according to the average in a Bloomberg survey.Adjusted operating profit in the fourth quarter fell to 1.1 billion euros, better than the average analyst estimate of 955.3 million euros.

Key Insights

“We expect 2021 to be challenging, a year of transition, with meaningful headwinds due to market share loss and price erosion in North America,” Chief Executive Officer Pekka Lundmark said in the statement.Net sales in the fourth quarter fell 5% to 6.57 billion euros. That compares with the average analyst estimate of 6.51 billion euros.Nokia also retained its guidance for an adjusted operating margin in the range of 7% to 10%.Nokia’s stock was entangled last week in bouts of speculative trading after being touted on a Reddit forum, sending the shares up about 17% and prompting the company to issue a statement saying it wasn’t aware of any developments that could have a bearing on its stock. The price of its American depositary receipts doubled at one point mid-week.The stock’s wild ride overshadows a larger transformation at the maker of fifth-generation mobile networks as Lundmark has vowed to do “whatever it takes” to stop losing market share and win 5G contracts. That includes investing more in research and development.The company’s board won’t propose a dividend for 2020 as it focuses on investing in 5G and other strategic areas.

Market Context

Nokia trades at about 17 times its estimated earnings per share for the coming year. The shares are up 20% this year through Wednesday, compared with a 6.4% gain for the Stoxx Europe 600 Telecommunications index.

Get More

Get the fourth-quarter earnings numbers here.Nokia has scheduled a capital markets day for March 18 and is planning to hold its annual general meeting on April 8.

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