Nokia Corp (NYSE:NOK) made several key announcements Tuesday, including cutting its financial outlook and sharing about a critical acquisition and a significant partnership.
The company revised its long-term financial targets, reducing its 2026 comparable operating margin target from at least 14% to at least 13%. This adjustment reflects current market conditions, particularly in the Mobile Networks sector. Despite this change, Nokia maintains a positive outlook on achieving the original 14% margin target in the longer term and sees opportunities for further margin growth beyond 2026.
The company's strategy includes growth objectives for its Network Infrastructure (NI) and Cloud and Network Services (CNS) divisions, aiming to outpace market growth through 2026. However, the Mobile Networks business will likely encounter challenges in 2024 and 2025 before resuming faster-than-market growth in 2026.
Last week, Nokia rival Ericsson (NASDAQ:ERIC) bagged the AT&T Inc (NYSE:T) deal.
AT&T chose Ericsson to lead the U.S. in commercial-scale open radio access network (Open RAN) deployment. AT&T will dole out $14 billion and build a telecom network that uses only so-called ORAN technology.
Under the five-year deal, Ericsson will leverage its USA 5G Smart Factory in Lewisville, Texas, to manufacture 5G equipment for this contract.
Nokia's other financial targets remain unchanged.
Nokia disclosed plans to acquire Fenix Group for terms undisclosed, strengthening wireless offerings in the defense segment. Fenix Group specializes in tactical 3rd Generation Partnership Project (3GPP) communications solutions for the defense communities.
Nokia held €4.6 billion in cash and equivalents as of September 30.
Nokia and Deutsche Telekom AG (OTC:DTEGY) (OTC:DTEGF) have announced the deployment of a multi-vendor Open RAN network in Germany, with collaboration from Fujitsu. The fully integrated into DT's live commercial network will provide 2G, 4G, and 5G services to customers in Neubrandenburg, Northern Germany. This development marks Nokia's significant re-entry into DT's commercial network following a Memorandum of Understanding signed at MWC 2023. Nokia will replace the current vendor in this deal, with the project already underway and set to expand from Q1 2024.
In DT's commercial network, Nokia's role involves deploying its Open RAN compliant 5G AirScale baseband solution, including Fujitsu Radio Units. The companies also plan to explore further O-RAN technologies, such as Cloud RAN, third-party CaaS, RIC, SMO, and energy efficiency measures.
Nokia stock has lost 33.5% year-to-date.
Price Action: NOK shares traded higher by 2.24% at $3.19 premarket Tuesday.
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