Firm to start out share buybacks

Nokia on Thursday mentioned that it’ll start a two-year 600 million euro ($653 million) share buyback this quarter, after reporting that its revenue plunged in 2023.

One of many world’s largest cell community tools makers, Nokia posted fourth-quarter web gross sales of 5.7 billion euros, a 23% year-on-year decline. Comparable working revenue fell 27% year-on-year to 846 million.

“In 2023 we saw a meaningful shift in customer behavior impacting our industry driven by the macro-economic environment and high interest rates along with customer inventory digestion,” Nokia CEO Pekka Lundmark mentioned in an announcement.

Stock digestion refers to clients, resembling telecommunications networks, utilizing gear that they’ve already purchased, somewhat than buying new tools.

Lundmark mentioned the “challenging environment” of 2023 will proceed into 2024.

The corporate forecast comparable working revenue will attain between 2.3 billion euros and a couple of.9 billion euros in 2024. Analysts expect working earnings to sit down close to 2.4 billion euros in 2024, in accordance with LSEG consensus estimates.

Nokia has been damage by telecommunications operators reducing again on spending on their networks. India, which has been investing closely in its next-generation cell networks over the previous couple of years, is starting to decelerate.

Cellular networks, Nokia’s largest division by income, noticed gross sales fall 17% year-on-year to 2.5 billion euros within the fourth quarter.

“In Mobile Networks, we expect top line challenges in 2024 related to a more normalized pace of investment in India and the AT&T decision,” Lundmark mentioned.

The corporate suffered a large deal in December, when U.S. cell service AT&T signed a take care of Nokia rival Ericsson to construct a brand new sort of 5G community within the U.S. AT&T’s community will rely closely on Ericsson, somewhat than on Nokia.

That deal has had an impression on Nokia whose shares have fallen round 25% during the last yr.

Lundmark known as this a “disappointing development” that “does not reflect the technological competitiveness” of Nokia.

On Thursday, the corporate mentioned it’s now decreasing its comparable working margin goal to be achieved by 2026 from a minimum of 14% to a minimum of 13%.

“Nokia still sees a path to achieving the at least 14% comparable operating margin target but considering the current market conditions in Mobile Networks, this was deemed a prudent change,” Nokia mentioned.

The agency’s warnings concerning the outlook for 2024 come after rival Ericsson additionally reported a fall in sales and operating profit for the fourth quarter. Ericsson additionally signaled a difficult 2024 forward, noting clients reducing spending and funding in India slowing down.