Nokia stock climbs as cost cuts limit damage from 23% drop in sales
By Steve Goldstein
Nokia shares rallied on Thursday as the telecom equipment maker reported better-than-expected margins despite sales missing estimates.
U.S.-listed Nokia shares (FI:NOKIA) (NOK) jumped 12% as the company reported a loss of EUR33 million on a 23% decline in revenue to EUR5.71 billion. On a comparable basis, Nokia said it would have earned EUR568 million, a decline of 39%. Analysts polled by Visible Alpha expected an adjusted profit of EUR659 million on sales of EUR6.27 billion.
Like rival Ericsson earlier in the week, Nokia said economic uncertainty was pressuring operator spending, though it said there were signs of "green shoots."
But investors were impressed with its gross margin, which fell just 0.4 percentage points to 43.1% on a comparable basis. Nokia said improvements in mobile networks and cloud and network services helped to offset a decline from its technologies division.
"Despite the revenue miss, cost control and mix shift to more software meant that gross margin beat by 264bps," said Sandeep Deshpande, an analyst at JPMorgan.
Nokia also announced a new EUR600 million stock buyback program, over two years, and guided to a comparable operating profit between EUR2.3 billion and EUR2.9 billion, which is in line with analyst estimates.
Andrew Gardiner, an analyst at Citi, kept a sell rating on the company and a target of EUR2.7. "Nokia is doing the right things in terms of further cost cuts, but is now fighting back from an even deeper hole than anticipated in December," he said.
-Steve Goldstein
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01-25-24 1023ET
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