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Nokia is boosting its profitability with a 5G track return program



(Bloomberg) – Nokia Oyj has accelerated its year-round profit targets after cutting costs and overhauling its products to catch up with competitors in the fifth-generation wireless network.

The company expects a decrease in earnings per share of 0.25 eurocents plus or minus 5 kopecks against the previous forecast of 0.23 euro cents. Adjusted operating income in the second quarter was 423 million euros, beating average analysts̵

7; estimates of 289.8 million euros, according to Bloomberg-tracked ratings.

Basic data

CEO Radeyev Suri’s recent performance as CEO marked a low point for Nokia after it lost ground to competitors in 5G mobile networks and the coronavirus disrupted supply chains and reduced investment. Covid-19 and China are declining, Suri said in a statement. “We expect most of the sales missed in the quarter through Covid-19 to shift to future periods.” Its fortunes need to improve as the new low-cost radio access base station returns it to the 5G game and Huawei’s main competitor is pushed out of key European markets by a US-led boycott campaign. The company’s struggle may be one of the reasons Nokia can improve its guidance. Earlier, it said it was expected to operate in line with the market.

Market context

Nokia shares rose about 4% in the year after Thursday’s close. More analysts advise customers to buy shares than recommend holding or selling shares.

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Suri’s replacement, Pekka Lundmark, will take over on August 1 and is expected to begin reviewing the strategy. Suri’s biggest move was the acquisition of rival Alcatel-Lucent in 2016, an agreement that gave Nokia a wide range of products but required a complex integration process that analysts said distracted management just as the 5G race began. decreased by 11% compared to a year earlier to 5.09 billion euros (6.05 billion dollars), compared with the analyst’s average forecast of 5.31 billion euros. Nokia reported an operating margin of 9.5% plus or minus 1.5 percentage points against the previous intermediate level of 9.0%. See the numbers here. Nokia to cut 1,200 French jobs in former Alcatel-Lucent businessAs Alcatel’s Nokia proposal returns to harassing its CEO

(Update with CEO comments in Key Insights)

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