Nokia expects a second year of declining revenue with the telecommunications equipment maker warning of a difficult 2021 as it struggles to assert itself in the 5G market against rivals Huawei and Ericsson.
The Finnish group said on Thursday that it expects sales this year to be € 20.6 billion to € 21.8 billion compared to € 21.9 billion in 2020 and warns that it will suffer a “significant decrease” in its core operating networks if due to fierce competition in the US.
“We expect 2021 to be challenging, a year of transition, with significant headwinds due to loss of market share and price erosion in North America,” said Pekka Lundmark, since August’s CEO.
He told the Financial Times that the group was “willing to sacrifice some profitability” to try to regain leadership in 5G technology by increasing its R&D spending, as it seeks to raise the ground for the Chinese Huawei and Sweden Ericsson lost, to recover.
Nokia was caught off guard by the early start of sales for 5G networks, as it still consumed the € 15.6 billion acquisition of Alcatel-Lucent. It replaced both its CEO and chairman last year amid questions about why it was unable to capitalize on the US-led campaign against Huawei.
Sales and earnings fell in the fourth quarter, but by less than analysts had expected. According to Refinitiv’s data, revenue fell 5 percent to € 6.57 billion from a consensus forecast of € 6.42 billion, while underlying earnings per share were € 0.14, compared to € 0.15 a year earlier. , but before the analysts’ estimate of € 0.11.
Nokia said its comparable operating margin would be 7 to 10 percent, compared to 9.7 percent in 2020. It will not pay a dividend for 2020, but will evaluate at the end of the year whether it will pay one for 2021, taking into account its net cash position and outlook for 2022.
Mr Lundmark has vowed to ‘invest what it takes to win in 5G’ in a sign of how seriously Nokia is taking the fight. But he expects his market share in 5G outside China this year, where he, unlike Ericsson, has struggled to secure deals, would be 25 to 27 percent, from 27 to 28 percent in 2020. ‘It will be a year when we put the baseline back in order, and get the technology right, ”he added.
Nokia shares rose more than a fifth this year. It was one of the stocks pushed up by amateur traders on Reddit, but fell 14 percent from a recent high last week.
Lundmark said that unlike other stocks targeted by Reddit traders, Nokia did not have a significant number of short sellers, adding that the company was ready to help regulators who want to investigate the market convulsions.