Nokia Q4 Profit Slides, Announces $653 Million Share Buyback Program

BySamson Ononeme

Jan 25, 2024
Nokia announced a 600 million euro buyback after posting a 23% Q4 profit drop and projecting subdued network spending amid loss of an AT&T 5G deal and India slowdown.

Key Insights

  • Nokia Q4 sales fell 23% year-on-year, sees challenging environment continuing into 2024
  • Launching 600 million euro share buyback program, but trimmed long-term profitability outlook
  • Lost key AT&T 5G deal in U.S. to rival Ericsson; headwinds like slowing India investments

HELSINKI – Nokia (NOKIA.HE) on Thursday forecast another challenging year after reporting a 23% fall in fourth-quarter sales, but announced a 600 million euro ($653 million) share buyback to appease investors.

Shares in the telecom equipment maker rose 7% as it said a tough 2023 would stretch into 2024 amid slowing investment in key market India and after losing a large U.S. contract.

Nokia CEO Pekka Lundmark described the overall environment as mixed, with macroeconomic uncertainty and high interest rates combining with a customer inventory digestion phase to hurt demand.

In 2023 we saw a meaningful shift in customer behavior impacting our industry driven by the macro-economic environment… This challenging environment will continue into 2024, Lundmark said in a statement.

The company forecast 2024 operating profit between 2.3 billion euros and 2.7 billion euros, compared to analyst expectations of around 2.4 billion euros according to Refinitiv data.

It also trimmed its long-term profitability target. Nokia now expects a comparable operating margin of at least 13% in 2026 rather than at least 14% previously, citing tough conditions in its main Mobile Networks business.

Mobile Networks sales fell 17% in the fourth quarter as Nokia got squeezed after winning a smaller share of next-generation 5G network rollouts by China’s largest telecom operators.

Lundmark described losing the large AT&T network deal to arch-rival Ericsson in December as a “disappointing development”.

Ericsson CEO Borje Ekholm issued similar growth warnings on Friday following a revenue miss in the fourth quarter. Investments in India were slowing, Ekholm said.

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