Investing.com -- Nokia (HE:NOKIA) shares dropped after the company reported third-quarter 2024 earnings that missed analysts' sales expectations by 9%.
At 3:56 am (0756 GMT), Nokia was trading 4.4% lower at €3.868.
The telecom giant's sales fell 7% year-on-year in constant currency, or 8% on a reported basis, with the decline largely driven by weaker performance in its Mobile Networks division, particularly in India, and the impact of a divestment in its Cloud and Network Services unit.
The slower-than-expected sales recovery has raised concerns among investors, contributing to the stock decline.
Despite a strong performance in its Network Infrastructure business, where order intake remained solid, the company’s overall sales recovery continues to lag expectations.
Analysts at Morgan Stanley said that while Nokia's operating profit met forecasts, excluding a one-off benefit in its Mobile Networks unit, earnings fell short of expectations.
This signals that the company’s underlying performance remains under pressure, particularly in the face of market weakness.
Nokia’s gross margin saw an improvement, with the comparable margin rising 490 basis points year-on-year to 45.7%, driven by improvements across its business segments, particularly Mobile Networks.
However, this boost was not enough to cushion the sales shortfall.
Nokia now expects its full-year operating profit to come in at the lower end of its guidance range of €2.3 billion to €2.9 billion, down from a previous expectation closer to the midpoint or slightly below it, said Morgan Stanley.
If consensus estimates are revised to reflect this guidance, as Morgan Stanley analysts suggest, it could lead to a downgrade of up to 7% in earnings forecasts, pushing the projected EBIT from €2.5 billion to €2.3 billion.
“These results and outlook statements point to healthy revenue and profit growth in NI in 2025, with the acquisition of Infinera (NASDAQ:INFN) coming on top. On the other hand the outlook for Mobile Networks remains uncertain,” said analysts at Jefferies in a note.