(CTN News) – Nokia, the Finnish telecom gear group, announced on Saturday that it will not be able to meet its financial targets for the year.
This is due to the fact that the revenue from license renewal discussions, which are expected to continue into the next year, cannot be recognized at this time.
The company stated that its full-year outlook is based on the assumption that outstanding license renewals in its technology unit, Nokia Technologies, will be closed. However, no details were provided regarding the specific licenses or the parties involved in the renewal talks.
Despite a request for comment, Nokia did not immediately respond.
Nokia also mentioned that it does not anticipate the negotiations to be concluded before the end of this year. Instead, it now expects a resolution to occur in 2024, which will have a positive impact on its financial performance in the following year.
Nokia’s patent portfolio, which consists of over 20,000 patents, including more than 5,500 essential to 5G, is the result of an investment of over 140 billion euros in research and development.
Earlier this year, Nokia signed a new long-term patent license agreement with Apple (AAPL.O) as their current license is set to expire at the end of 2023.
The company’s profit margins have been affected by the slowing sales of 5G equipment in key markets like North America. This was evident when AT&T recently selected Ericsson over to build their telecom network, resulting in a decline in market share.
Furthermore, Nokia reported a 20% decrease in third-quarter sales and expressed uncertainty about achieving their full-year 2023 targets for net sales, comparable operating margin, and free cash flow.
However, the company anticipates a significant improvement in net sales for its networks businesses in the fourth quarter. Nokia will release its quarterly and full-year results on Jan. 25.
In an effort to reduce costs, the company had previously announced the elimination of up to 14,000 jobs in October. Despite these challenges, Nokia aims to achieve net sales between 23.2 billion euros ($25.60 billion) and 24.6 billion euros by 2023, while also targeting savings of 800 million euros to 1.2 billion euros by 2026.