HELSINKI (Reuters) – Finnish telecommunications network maker Nokia has warned of the challenges ahead this year as it tries to catch up with rivals after a strong end by 2020.
While both Nokia and its rival Ericsson have won 5G customers, who otherwise could have gone to Huawei in China, Ericsson has done better, winning large 5G contracts in China, where the deployment of the new generation network is in full development.
“We have not yet made a breakthrough in 5G (in China), but of course we do not rule out this possibility in the future,” new CEO Pekka Lundmark told Reuters. “But we want to be careful so we don’t want to be there at any cost.”
Lundmark reported better-than-expected earnings and underlying profit on Thursday, but Nokia forecasts that 2021 revenue will fall between $ 20.6-21.8 billion ($ 25-26 billion) from $ 21.9 billion in 2020.
“We expect 2021 to be a challenging, transition year with significant winds due to lost market share and price erosion in North America,” Lundmark said.
Nokia has said it has lost part of its Verizon 5G contract in the United States to Samsung Electronics.
Lundmark announced a new strategy here in October, in which the company will have four business groups and said Nokia will “do whatever it takes” to take the lead in 5G, as banks will also take over from Huawei.
“We think we’ve captured about half of the geopolitically influenced opportunities that exist from year to day,” Lundmark said. “Most of these cases have been in Europe.”
Nokia said an increase in 5G equipment sales in the quarter was partially offset by a decline in its old radio access products. Revenue from its core networks fell 7% to 5.04 billion euros ($ 6.05 billion).
Revenues as a whole fell 5% to 6.57 billion euros in the quarter, but exceeded a consensus figure of 6.42 billion euros, Refinitiv Eikon data showed.
The underlying quarterly earnings fell to € 0.14 per share from € 0.15 a year ago, exceeding the consensus of € 0.11.
There was also an increase of around € 250 million in unique items and net sales of € 150 million in the quarter it had expected in 2021.
Nokia shares, which fell 1.9% in morning trading, have been wildly fluctuating in the past two weeks, driven by retail frenzy, along with GameStop Corp. and other technology companies.
“We maintain that Nokia continues to remain Ericsson in technology and is unlikely to catch up before 2022,” said Liberum analyst Janardan Menon.
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Reporting by Tarmo Virki and Supantha Mukherjee; Additional reporting by Essi Lehto; Editing by Rashmi Aich and Elaine Hardcastle