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<\/a><\/p>\nThe second-quarter results are the latest indication that a turnaround strategy launched before the pandemic is paying off. Nokia had already signaled it was ready to raise its guidance, but the company still managed to exceed analyst expectations.<\/p>\n
The company\u2019s ability to secure supply will be key in determining its success as it tries to go from underdog to top performer in the race to deliver next-generation mobile networks. Unlike previous chipset issues to have hit Nokia, however, the current component shortage also affects its competitors.<\/p>\n
Daily work with semiconductor suppliers \u201cis only intensifying,\u201d Lundmark said. Nokia\u2019s current guidance takes the supply issue into account, he also said.<\/p>\n
\u201cWe are able to manage it,\u201d he said. \u201cIt requires a lot of attention, the visibility is not what it used to be.\u201d<\/p>\n
Key Figures –<\/p>\n
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- Nokia now expects to reach a comparable operating margin of 10-12% this year with sales in the range of 21.7 billion euros ($25.7 billion) to 22.7 billion euros. It previously forecast a margin of 7-10% and sales of up to 21.8 billion euros.<\/li>\n
- Net sales rose to 5.31 billion euros last quarter, more than the average analyst estimate of 5.16 billion euros. Comparable operating profit reached 682 million euros.<\/li>\n
- The Mobile Networks unit, Nokia\u2019s biggest, benefited for a one-time software deal worth about 80 million euros, the company said.<\/li>\n<\/ul>\n
Nokia has managed to respond to growing demand without letting costs swell. That\u2019s as a combination of technology fixes, savings and job cuts pays off. The company has also had a little help from outside as geopolitical tensions deliver a blow to its main competitor.<\/p>\n
The company recently won a 4% slice of China Mobile Ltd\u2019s 5G tender. Its arch rival Ericsson AB got just 2%, as it absorbs the fallout of Sweden\u2019s decision to ban Huawei Technologies Co and ZTE Corp.<\/p>\n
For Nokia, the Chinese order helps CEO Lundmark move ahead with his turnaround strategy, which includes slashing the workforce by as many as 10,000 people.<\/p>\n
Nokia\u2019s recovery path started in late 2019, when then-CEO Rajeev Suri halted dividends and instead reinvested the money in research and development. That\u2019s after the company was forced to acknowledge its 5G offering was inferior and more expensive to make than rivals\u2019 products.<\/p>\n
\u201cWe\u2019re now seeing the fruits of all the labor to improve 5G products that started about six months before Suri stepped down as CEO,\u201d Kimmo Stenvall, an analyst at OP Group in Helsinki, said by phone before Thursday\u2019s report.<\/p>\n
\u201cThe impact of Lundmark\u2019s turnaround is probably pretty small still at this stage, given it started so recently. The benefits will eventually be seen in higher revenue and an improved gross margin.\u201d<\/p>\n
Nokia\u2019s stock has now risen almost 70% since the start of the year and several analysts have upgraded the shares. Ericsson is up less than 2% over the same period.<\/p>\n
\u201cThe turnaround story has gripped the Nokia stock in recent months,\u201d Stenvall said. \u201cIt seems people are ignoring weaknesses, and trust that the new management is able to push through changes.\u201d<\/p>\n