(Boursier.com) — Nokia stabilizes at 3 euros at the end of the session after its recent fall, to its lowest since the end of 2020 in the wake of the group’s latest announcements. If the quarterly publication of the telecom equipment manufacturer promised to be complicated, it came out significantly weaker than anticipated and was accompanied by a large reduction in staff. The Scandinavian giant will in fact eliminate up to 14,000 jobs…
Among the many reactions from analysts, Goldman Sachs lowered the cursor from 5.4 to 4.8 euros while remaining on the buy side, while Carnegie reduced its target from 5.2 to 4.7 euros (“buy” ) and JP Morgan reduced its target from 6.5 to 5.3 euros (‘overweight’). For SocGen, the massive revenue shortfall means that the market slowdown – more visible at Ericsson so far than at Nokia – is catching up with the company at high speed… Even if reductions in sales estimates EPS for this year could be limited thanks to gross margin resilience and cost controls, the new and substantial restructuring at Nokia implies that this slowdown will be deeper and longer than the consensus had previously modeled.
Significant failure
Morgan Stanley, for its part, believes that the third quarter results are a “significant failure” with two big disappointments concerning two key units, mobile networks and network infrastructure… The operating margin of mobile network activities is “very low ” amid declining sales in North America as customers continue to prioritize cash flow and deplete inventory. Jefferies explains that even assuming that the ongoing discussions in the Technologies division (editor’s note: with the Chinese Oppo and Vivo), which have lasted for more than a year, result in an agreement, it could prove difficult for the Finnish group to reach the bottom of its revenue forecast range. On the positive side, Nokia is seeing a shift in regional distribution in the mobile networks division, which will help improve margins.
Finally, to summarize, Barclays explains that Nokia is experiencing largely similar trends to Ericsson, suffering from a challenging spending environment for telecom operators. We might have expected a weak result after Ericsson’s third quarter, “but it remains disappointing”…
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