MW Nokia shares head for best day in months, as hard-hit mobile business appears to be stabilizing

By Barbara Kollmeyer

Nokia reports fourth-quarter profit of $847 million and a rise in sales of 10% compared with a year ago

Investors cheered results from Finnish telecom-equipment maker Nokia Corp., which swung to a profit in the final quarter of 2024, driving shares to their best session in months.

Nokia's American depositary receipts $(NOK)$ jumped 7.8% at the start of U.S. trading, which, if it holds, will mark the best one-day gain since a 9.4% rise in October. Shares in Helsinki were also looking at their best day since that month.

Nokia reported a fourth-quarter profit of EUR813 million ($847 million) from a loss of a EUR33 million a year ago. Sales rose 10% compared with a year ago to EUR5.983 billion. Analysts polled by Visible Alpha had projected a profit of EUR709 million on sales of EUR5.745 billion.

The company credited strong sales from network infrastructure, which grew 17%, and its Nokia Technologies unit, where it said "several new deals were signed," driving sales growth of 85% in the quarter.

Mobile networks, which have been a sore point for the company, saw a 2% decline in net sales, but executives said trends were beginning to stabilize, with improving demand from telecom operators in North America and sales up 18%. Nokia had an uphill battle entering 2024 as it dealt with the fallout from losing a chunk of AT&T's business.

Pekka Lundmark, president of Nokia, alluded to that tough time on a call with analysts Thursday.

"But even considering this, we expect net sales to be largely stable for mobile networks this year, meaning, of course, that the rest of all our customers will compensate for that 4 percentage point drop with one customer," Lundmark said.

The company also proposed a dividend of EUR0.14 per share. Looking ahead, Nokia is forecasting a comparable operating profit of between EUR1.9 billion and EUR2.4 billion for 2025, though Citi analysts pointed out that the midpoint of that is 6% below the consensus of EUR2.3 billion.

"Elements of its business group are performing well, but the group fundamentals continue to be weighed upon by Mobile Networks," said a team of Citi analysts led by Andrew Gardiner.

The analysts cautioned that based on the price-to-earnings ratio, a common metric for gauging how expensive a share is, Nokia's shares in Helsinki trade at 19 times 2025 earnings and 16 times 2026 earnings. "We think too much of a recovery has been priced into shares," Gardiner said.

He compared that with peer Ericsson $(ERIC)$ (SE:ERIC.B), which is trading at a cheaper 13 and 12 times, respectively, "but offering stronger fundamentals in Mobile."

-Barbara Kollmeyer

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January 30, 2025 09:55 ET (14:55 GMT)

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