Nokia is still struggling to take advantage of the 5G. The Finnish supplier announced Thursday its results for the third quarter. If the group is happy to be back in the green, with a net profit of 82 million euros, his staff has revised downward its forecasts for 2019 and 2020. Why? "Mainly due to pressure on margins, additional investments in 5G and additional investments in digitization"Nokia said in a statement.
In detail, Nokia today expects an operating margin of about 8% for 2019 (against 9% to 12% previously announced), then about 9.5% for 2020 (against 12% to 16% previously) . In general, the group is struggling to compete with its major rivals, the Swedish Ericsson and Chinese Huawei, which weighs on prices. In its statement, Nokia mentions several difficulties. Firstly there is "The high cost level associated with (its) 5G products". But also "The challenges of profitability in China", a market as huge as it is crucial for the next generation of mobile communication, and where the battle rages with Huawei and Ericsson. Nokia also regrets "The pressure on prices in the first 5G equipment contracts", and "The uncertainty of the merger" between Sprint and T-Mobile in the United States.
Result: Nokia has announced that it will not pay a dividend in the third and fourth quarter. To justify this decision, the group argues that it needs cash to increase its investment in 5G, and bail out its cash.
Nokia said dividend payments will resume when cash reaches 2 billion euros. These measures provoked a revolt of investors. At the beginning of the afternoon, the stock plummeted by more than 20% on the Helsinki Stock Exchange, at 3.77 euros.