(Bloomberg) -- Nokia Oyj sales missed analysts’ estimates in the third quarter, blaming a slower-than-expected recovery in the telecom equipment market.
Net sales fell 8% to €4.33 billion ($4.7 billion) in the quarter from a year earlier, the Espoo, Finland-based company said in a statement on Thursday. Analysts had been expecting €4.73 billion. Three-quarters of the sales decline was due to India, which has steadied after a wide 5G rollout last year.
Nokia shares fell 4.5% to €3.82 at 10:39 a.m. in Helsinki trading.
While Nokia kept its full-year adjusted operating profit guidance of €2.3 billion to €2.9 billion, it said the total was likely to be in the bottom-half of the range. A slow recovery in sales was partially offset by an improving gross margin and cutting costs.
“Overall, I’m optimistic that we are now turning the corner in many parts of our business despite net sales recovery happening more slowly than we expected,” Chief Executive Officer Pekka Lundmark told reporters in a call.
Adjusted operating profit for the quarter was €454 million, beating an average analyst forecast of €445 million. Lundmark said the company is on track to meet the lower-end of its projected range for the full year as existing contracts pay off.
Nokia and its Nordic competitor Ericsson AB have been grappling with a weak equipment market as telecom operators delay or scale back expensive network upgrades. Ericsson reported improved earnings earlier this week thanks to its $14 billion infrastructure deal with AT&T Inc. — a major blow to Nokia.
Nokia secured a number of network deals this quarter, including with Vodafone Idea Ltd. last month, and 5G tie-ups with TIM Brasil and Viettel Group in Vietnam.
“We have won much more than what we have lost, and we have continued to increase our market share outside of the AT&T decision,” Lundmark said.
Nokia has been making efforts to diversify its customer base, most notably by acquiring Infinera Corp., which specializes in networking products for data centers, this summer.
“We are a traditional telco supplier, but the telco market is never going to be a growth market,” Lundmark told Bloomberg. “That’s why, for us as a company, it’s crucially important that we are able to tap into new growth segments.”
One area of focus for Nokia is building secure communications networks for defense customers. Earlier this year, it completed the acquisition of US tactical communications company Fenix Group.
“The defense industry is very conservative and often slow-moving when we talk about their technology decisions — that’s the bad news,” Lundmark said. “But the good news is that once you are in, you are in, and after that, it is going to be a long-term opportunity.”
Nokia sold its subsea cable division over the summer and Bloomberg News previously reported that the company is also looking at options to sell off its mobile equipment division, although talks are at a very early stage and may not result in a deal.
Lundmark has been trying to convince investors of a turnaround since taking the reins at Nokia four years ago, slashing thousands of jobs and streamlining operations to cut costs.
(Updates with CEO comments throughout, share move.)
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