Nokia, a wireless and fixed-network equipment manufacturer, recently reported a smaller-than-expected profit and a significant double-digit decrease in sales for the first quarter of the year. This drop was primarily due to a lack of investment in 5G technology by clients, which weakened the market overall.
The company, based in Espoo, Finland, disclosed a net profit of 501 million euros ($535 million) for the period of January to March. This represented a 46% increase from the previous year, but still fell short of analysts’ expectations. One-off gains from Nokia’s licensing business contributed to the profit, while net income attributable to shareholders rose to 497 million euros from 332 million euros year-over-year.
Nokia’s sales also experienced a significant decline of 20% to 4.7 billion euros. The ongoing weakness in the telecom equipment market, where operators are scaling back on investments in 5G and other technologies due to economic uncertainty and high financing costs, was a major factor impacting the company’s performance in the first quarter.
Despite these challenges, Nokia’s CEO Pekka Lundmark expressed confidence in a stronger second half of the year and achieving the full-year outlook. He highlighted the continued improvement in order intake as a positive sign for the company’s future prospects.
Nokia is a key player in the 5G market, along with rivals Ericsson, Huawei, and Samsung. Lundmark acknowledged the low levels of spending on 5G technology in North America and India during the first quarter, which affected the performance of the mobile network unit, Nokia’s second-largest business entity.
Looking ahead, Lundmark remains optimistic about the potential for growth in the Network Infrastructure unit in the second half of 2024 and expects a return to net sales growth for the full year. Despite the challenging market conditions, Nokia is focused on capitalizing on order intake strength and positioning itself for future success in the rapidly evolving telecom industry.