Posted on Jul 14, 2021 at 2:16 PMUpdated on Jul 14, 2021, 3:02 PM
Those bewildered by the fantasies surrounding 5G on social media will find no solace in the supposed rationality of investors. The invisible hand of the market has taken the Nokia share to a two-year high just because the telecoms equipment manufacturer has mentioned a “continued solidity” of its activity and “good cost control” which will lead it to raise its objectives for 2021 when it publishes its half-yearly accounts at the end of the month.
Pekka Lundmark, the boss at the helm for almost a year, has learned the lesson. The new strategic plan presented in March in great detail by the former head of crane manufacturer Konecranes did not move the action one iota. This time, a cleverly maintained vagueness on the extent of the revision of the annual ambition added 2.1 billion euros of stock market value in two sessions (or + 8%).
It is true that the gains of new customers have suggested that Nokia might be able to catch up some of its lag behind Ericsson in 5G networks faster than expected. UBS analysts draw a parallel with the turnaround made in five years by the Swede, largely replicable by the Finn thanks to efforts on gross margin and the technological catch-up brought by a new chip.
But this one already showing a stock market premium on the stockholmois, the managers will not forget that in the land of the midnight sun, the dawns tend to drag on.
The 2021 objectives delivered last April by Nokia targeted a turnover of between 20.6 and 21.8 billion euros excluding exchange rates, that is to say at best a stability compared to the 2020 financial year, a operating margin between 7% and 10% (after 9% last year), positive free cash flow and return on invested capital between 10% and 15%.
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