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Shares Of Nokia Jump 8% After It Announces $653 Million Share Buyback Program

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Shares Of Nokia Jump 8% After It Announces $653 Million Share Buyback Program

(CTN News) – In response to declining profits in 2023, Nokia announced on Thursday that it would begin a two-year share buyback program this quarter for 600 million euros ($653 million).

Shares were up 8.5% at approximately 1.48 p.m. Thursday, London time.

Nokia, one of the world’s biggest mobile network equipment companies, reported net sales of 5.7 billion euros in the fourth quarter, down 23% from last year. A comparable operating profit of $846 million was down 27% year over year.

According to Nokia CEO Pekka Lundmark,

“In 2023 we saw a significant shift in customer behavior impacted by a macroeconomic environment, high interest rates, and customer inventory digestion.”

Rather than purchasing new equipment, customers, such as telecommunications networks, digest their inventory.

The “challenging environment” of 2023 will persist into 2024, according to Lundmark.

According to the company, 2024’s operating profit will be between 2.3 billion euros and 2.9 billion euros. By 2024, LSEG predicts operating income of close to 2.4 billion euros.

As a result of the reduction in spending by telecommunications operators on their networks, Nokia has suffered. Over the past couple of years, India has invested heavily in its next generation mobile networks.

Nokia’s largest revenue division, mobile networks, saw sales drop 17% year-over-year to 2.5 billion euros in the fourth quarter.

“In Mobile Networks, we anticipate top line challenges related to a more normalized investment pace in India and AT&T’s decision in 2024,” Lundmark said.

Nokia suffered a huge setback in December when U.S. Mobile carrier AT&T signed a deal with rival Ericsson to construct a 5G network in the U.S. Instead of Nokia, AT&T will rely heavily on Ericsson.

Nokia’s shares have fallen around 25% over the past year as a result of that deal.

Lundmark termed this a “disappointing development” that “does not reflect technological competitiveness”.

According to the company, it has now lowered its comparable operating margin target to at least 13% by 2026 from at least 14%.

“Nokia still expects to achieve the at least 14% comparable operating margin target, but given the current market conditions in Mobile Networks, this was considered a prudent move.

Earlier this month, rival Ericsson reported a decline in sales and profits. Ericsson says 2024 will be a tough year, as customers will cut spending and investments in India will slow.

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