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Nokia Sales and Profit Plummet Amid Economic Challenges and 5G Investment Cutbacks

Nokia's sales and profit have experienced a double-digit decline in the last quarter of 2023. Operators' cutbacks on 5G investments and economic uncertainty are the primary reasons for this downturn. Net profit and net income attributable to shareholders have significantly decreased compared to the previous year.

Nokia, the Finnish wireless and fixed-network equipment maker, has reported a significant decline in sales and profit for the last quarter of 2023. The company attributes this downturn to operators reducing their investments in 5G technology and other advancements due to economic uncertainty.

During the October-to-December quarter, Nokia's net profit stood at 568 million euros ($619 million), a sharp drop from the 929 million euros recorded in the same period the previous year. The company's net income attributable to shareholders also fell to 558 million euros, down from 931 million euros in the fourth quarter of the previous year.

As one of the leading suppliers of 5G technology globally, alongside Ericsson, Huawei, and Samsung, Nokia's sales took a hit, declining by 23% to 5.7 billion euros from 7.5 billion euros.


Nokia's CEO, Pekka Lundmark, acknowledged the impact of the macro-economic environment and high interest rates on customer behavior, leading to a decrease in demand for new equipment. He stated, "Looking ahead, we expect the challenging environment of 2023 to continue during the first half of 2024, particularly in the first quarter. However, we are now starting to see some green shoots on the horizon," referring to an improved order intake for Nokia's network infrastructure unit.


To navigate the weak market environment, Nokia announced plans in October to cut up to 14,000 jobs, aiming to reduce costs. The company recognised the need for these measures as clients put their investments on hold due to low economic growth and high interest rates.


The challenging economic climate has affected not only Nokia but also other tech companies. Online retailer eBay recently announced layoffs, citing the sluggish economy following rapid interest rate hikes implemented by central banks worldwide to combat inflation.

 
  • Nokia's sales and profit have experienced a double-digit decline in the last quarter of 2023.

  • Operators' cutbacks on 5G investments and economic uncertainty are the primary reasons for this downturn.

  • Net profit and net income attributable to shareholders have significantly decreased compared to the previous year.


Source: AP NEWS

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