Sharing its subdued financial expectations for 2017 Tuesday at its Capital Markets Day in Barcelona, Spain, did not go well for Nokia (NYSE: NOK) or its shareholders. At one point, Nokia shares were down nearly 8% reaching its lowest point in three years, but have since inched back up to “just” a 4% decline.
Though investors and analysts weren’t excited about much of what Nokia had to share about the coming year, it was the forecast 2% drop in its networking unit’s revenue that hurt the most, and it’s easy to see why. Of Nokia’s $6.4 billion in total revenue last quarter, $5.7 billion — 89% — came from its networking division.
As per Nokia’s announcement, the underlying reason for its projected drop in network revenue is an industrywide easing in spending. Over the past couple of years, telecoms have been in haste to install 4G networking equipment, but that rush is beginning to slow. Meanwhile, the build out of 5G networks isn’t expected to really hit its stride for at least a couple of years, all of which will put pressure on Nokia’s most important business.
Based on its rival Ericsson‘s ongoing problems — including a severely discounted profit warning ahead of earnings and the need to replacing its fired CEO — bearishness about Nokia’s networking outlook seems warranted. However, CEO Rajeev Suri did mention Nokia has outperformed its larger rival “in every area.”
Nokia’s proposed dividend of $0.18 a share in 2017 was also disappointing relative to what analysts had hoped for. Nokia topped off its not-so-bright outlook by forecasting a mere 1.2% annual growth rate for the entire networking market through 2021.
A secret billion-dollar stock opportunity
The world’s biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn’t miss a beat: There’s a small company that’s powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.
Tim Brugger has no position in any stocks mentioned.
{loadposition user99}