4A0-C02 answers - Okia SRA Composite Updated: 2023

Hong Kong CNN  — 

Nokia will slash up to 14,000 jobs in a major cost-cutting drive to address a “weaker” market environment, it said in a statement on Thursday.

The Finnish telecom giant, a major provider of 5G equipment that employs 86,000 people, announced the move as part of a wider restructuring that will lower its headcount to between 72,000 and 77,000.

The move will help the company reduce staffing expenses by 10% to 15%, and save at least €400 million ($421.4 million) in 2024 alone, the company projected.

Overall, it said the reductions are expected to trim Nokia’s costs by up to €1.2 billion (nearly $1.3 billion) cumulatively by the end of 2026. Nokia (NOK) said it would “act quickly” to make changes.

“The most difficult business decisions to make are the ones that impact our people,” CEO Pekka Lundmark said in the statement. “We have immensely talented employees at Nokia and we will support everyone that is affected by this process.”

The announcement came on the same day that Nokia reported worse-than-expected results. It said sales in the third quarter had fallen 15% compared to the same period a year ago, as “macroeconomic uncertainty and higher interest rates continue to pressure operator spending.”

Mobile network sales fell 19% in the third quarter compared to the previous year, the company added, due to a slowdown in the pace of 5G deployment in markets such as India.

This week, Swedish rival Ericsson also warned that sales in the second half of 2023 would likely come in lower than usual, echoing Nokia’s remarks of a “challenging environment and macroeconomic uncertainty.”

But Nokia has maintained its outlook for 2023, forecasting between €23.2 billion and €24.6 billion ($24.4 billion and $25.9 billion) in sales for the full year.

“We continue to believe in the mid to long term attractiveness of our markets,” Lundmark said.

Nokia has announced plans to cut up to 14,000 jobs over the next three years as it slashes costs after a worse-than-expected slump in demand for its mobile network equipment.

The Finnish technology company said the plans to cut 16% of its 86,000-strong global workforce were part of efforts to cut costs by €1.2bn by the end of 2026. The cuts were announced as the company revealed a 70% drop in third-quarter profits, which fell to €133m (£116m) compared with €428m a year earlier.

The Nokia chief executive, Pekka Lundmark, said: “The most difficult business decisions to make are the ones that impact our people. We have immensely talented employees at Nokia and we will support everyone that is affected by this process.

“Resetting the cost base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness. We remain confident about opportunities ahead of us.”

Nokia, which is headquartered in Espoo, Finland, did not detail where the job cuts would fall. It currently employs about 37,700 people in Europe, including in the UK, where it has offices in Bristol, Cambridge and Reading. Job cuts are also likely to affect its operations in the US, where it has about 10,500 staff in offices including in Chicago and Dallas.

Nokia said the exact scale of the cost-cutting programme would depend on demand for its products. However, it “expects to act quickly” in order to save as much as €400m next year and another €300m in 2025.

The company said that demand across the wider mobile networks market was likely to drop 9% overall this year. That is compared with previous expectations for a 2% decline.

That reflected a drop in sales in countries including India, where Nokia said the pace of the country’s 5G rollout had “moderated” and was “no longer enough to offset the slowdown in North America”.

In the home computer market of the 1980s, there were several winners that are still household names four decades later: the Commodore 64, the Apple II and the Sinclair Spectrum, to name a few. But where there are winners, there are bound to be losers as well – the Mattel Aquarius being a good example. A price war between the bigger players, combined with a rather poor hardware design, meant that the Aquarius was discontinued just a few months after its introduction in 1983. However, this makes it exactly the type of obscure machine that [Leaded Solder] likes to tinker with, so he was happy to finally get his hands on a neat specimen listed on eBay. He wrote an interesting blog post detailing his efforts to connect this old beast to a modern TV.

The main issue with the Aquarius is that it only has an RF video output, which results in a rather poor rendition of its already very limited graphics capabilities. Luckily, there is a fix available in the form of a composite A/V adapter that’s an almost plug-and-play upgrade. The only thing you need to do, as [Leaded Solder] illustrates in his blog post, is open up the computer, desolder the RF modulator and solder the A/V adapter in its place. Getting to that point was a bit tricky due to heavy EMI shields that were fixed in place with lots of solder, requiring liberal use of a desoldering iron. Continue memorizing “Adding Composite Video To The Mattel Aquarius” →

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Nokia Corporation
Interim Report
19 October 2023 at 08:00 EEST

Nokia Corporation Interim Report for Q3 2023

Outlook maintained despite weak operator spending weighing on Q3

• Q3 net sales declined 15% y-o-y in constant currency (-20% reported) as macroeconomic uncertainty and higher interest rates continue to pressure operator spending.

• Enterprise net sales grew 5% y-o-y in constant currency (flat reported).

• Comparable gross margin declined 120bps y-o-y to 39.2% (reported declined 140bps to 38.7%) due mainly to regional mix in Mobile Networks. Sequentially Mobile Networks gross margin improved 140bps due to favorable regional mix.

• Comparable operating margin declined y-o-y by 200bps to 8.5% (reported declined 350bps to 4.8%) , demonstrating the resilience of our profitability relative to the net sales decline.

• Comparable diluted EPS of EUR 0.05; reported diluted EPS of EUR 0.02.

• Free cash flow negative EUR 0.4bn, net cash balance EUR 3.0bn, working capital headwinds expected to ease starting Q4.

• Announces acceleration in strategy execution giving increased operational autonomy to business groups. Operating model change to embed sales teams into business groups. Target EUR 800 to 1 200 million gross cost savings by 2026.

• Nokia continues to expect full year 2023 net sales in the range of EUR 23.2 to 24.6 billion with a comparable operating margin in the range of 11.5% to 13.0% assuming closure of outstanding deals in Nokia Technologies.

This is a summary of the Nokia Corporation Q3 and January-September 2023 Interim Report published today. Nokia only publishes a summary of its financial reports in stock exchange releases. The summary focuses on Nokia Group's financial information as well as on Nokia's outlook. The detailed, segment-level discussion will be available in the complete financial report hosted at www.nokia.com/financials. A video interview summarizing the key points of our Q3 results will also be published on the website. Investors should not solely rely on summaries of Nokia's financial reports and should also review the complete reports with tables.

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PEKKA LUNDMARK, PRESIDENT AND CEO, ON Q3 2023 RESULTS

Our third quarter performance demonstrated resilience in our operating margin despite the impact of the weaker environment on our net sales. In the last three years we have invested heavily to strengthen our technology leadership across the business giving us a firm foundation to weather this period of market weakness.

We continue to believe in the mid to long term attractiveness of our markets. Cloud Computing and AI revolutions will not materialize without significant investments in networks that have vastly improved capabilities. However, given the uncertain timing of the market recovery, we are now taking decisive action on three levels: strategic, operational and cost. I believe these actions will make us stronger and deliver significant value for our shareholders.

First, we are accelerating our strategy execution by giving business groups more operational autonomy. Second, we are streamlining our operating model by embedding sales teams into the business groups and third, we are resetting our cost-base to protect profitability. We target between EUR 800 million and EUR 1 200 million in cost savings by 2026. These actions keep us on track to deliver our long-term target comparable operating margin of at least 14% by 2026.

In the third quarter we saw an increased impact on our business from the macroeconomic challenges that are pressuring operator spending, resulting in a 15% net sales decline in constant currency compared to the prior year. Network Infrastructure declined 14% due to weaker spending impacting IP Networks while Fixed Networks was impacted by the same challenge combined with customer inventory digestion. In Mobile Networks net sales declined 19% as we saw some moderation in the pace of 5G deployment in India which meant the growth there was no longer enough to offset the slowdown in North America. Cloud and Network Services proved more robust in the quarter with a 2% decline and continued to benefit from strong growth in the Enterprise Solutions business.

Considering the net sales decline, our comparable operating margin of 8.5% proved resilient due to our continued cost discipline and some additional other operating income in the quarter. Positively we saw a sequential improvement in our Mobile Networks gross margin as regional mix is starting to become more favorable along with continued improvements on product cost.

In Nokia Technologies we remain confident the business group will return to a net sales annual run-rate of EUR 1.4-1.5 billion as we work through the smartphone license renewal cycle and continue to grow in new areas.

We had a number of important product launches in the quarter as we continue to invest for technology leadership. In IP Networks, we announced our new FPcx routing silicon which helps us to extend the high-performance capabilities of our IP Networking silicon further across the network to provide a broader range of applications to customers. In Cloud and Network Services we launched our organically developed Network as Code platform enabling developers and service providers to accelerate the use and monetization of 5G and 4G assets through network APIs. We have significant interest from operators globally and we have already signed four agreements.

Looking forward, while our third quarter net sales were impacted by the ongoing uncertainty, we expect to see a more normal seasonal improvement in our network businesses in the fourth quarter. Based on this and assuming we resolve the outstanding renewals impacting Nokia Technologies, we are tracking towards the lower end of our net sales range for 2023 and towards the mid-point of our comparable operating margin range.

FINANCIAL RESULTS

¹ _{Comparable ROIC = Comparable operating profit after tax, last four quarters / invested capital, average of last five quarters’ ending balances. Refer to the Performance measures section in Nokia Corporation Q3 and January-September 2023 Interim Report for details.}

SHAREHOLDER DISTRIBUTION

Dividend

Under the authorization by the Annual General Meeting held on 4 April 2023, the Board of Directors may resolve on the distribution of an aggregate maximum of EUR 0.12 per share to be paid in respect of financial year 2022. The authorization will be used to distribute dividend and/or assets from the reserve for invested unrestricted equity in four installments during the authorization period, in connection with the quarterly results, unless the Board decides otherwise for a justified reason.

On 19 October 2023, the Board resolved to distribute a dividend of EUR 0.03 per share. The dividend record date is on 24 October 2023 and the dividend will be paid on 2 November 2023. The actual dividend payment date outside Finland will be determined by the practices of the intermediary banks transferring the dividend payments.

Following this announced distribution, the Board’s remaining distribution authorization is a maximum of EUR 0.03 per share.

Share buyback program

In February 2022, Nokia’s Board of Directors initiated a share buyback program to repurchase shares to return up to EUR 600 million of cash to shareholders in tranches over a period of two years. The second EUR 300 million phase of the share buyback program started in January 2023 and it will end at the latest by 21 December 2023. Under this phase, Nokia had by 30 September 2023 repurchased 65 298 823 of its own shares at an average price per share of approximately EUR 3.95.

OUTLOOK

¹_{Assuming the rate 1 EUR = 1.06 USD as of 30 September 2023 continues for the remainder of 2023 along with actual year-to-date foreign exchange rates (adjusted from prior 1.09 USD rate as of 30 June 2023).}
² _{Please refer to Performance measures section in Nokia Corporation Q3 and January-September 2023 Interim for a full explanation of how these terms are defined.}

The outlook, long-term targets and all of the underlying outlook assumptions described below are forward-looking statements subject to a number of risks and uncertainties as described or referred to in the Risk Factors section later in this release. Along with Nokia's official outlook targets provided above, below are outlook assumptions by business group that support the group level outlook. The comments for relative growth by business group are provided to give a reference on how we expect each to perform relative to the overall group.

¹ _{Total addressable market forecasts assume the rate 1 EUR = 1.06 USD as of 30 September 2023 continues for the remainder of 2023 along with actual year-to-date foreign exchange rates. The addressable market is excluding Russia and Belarus.
² Excluding Submarine Networks.}
³ _{Excluding China.}

Nokia provides the following approximate outlook assumptions for additional items concerning 2023:

LONG-TERM TARGETS

Nokia's long-term targets remain unchanged from those introduced with its Q4 2021 financial results. The targets had an associated timeline of 3-5 years which remains unchanged and implies by 2024-2026. These targets remain intended to show Nokia's ambition to deliver continuous improvement in the business over the time period.

¹ _{Please refer to Performance measures section in Nokia Corporation Q3 and January-September 2023 Interim Report for a full explanation of how these terms are defined.}

RISK FACTORS

Nokia and its businesses are exposed to a number of risks and uncertainties which include but are not limited to:

• Competitive intensity, which is expected to continue at a high level as some competitors seek to take share;

• Our ability to ensure competitiveness of our product roadmaps and costs through additional R&D investments;

• Our ability to procure certain standard components and the costs thereof, such as semiconductors;

• Disturbance in the global supply chain;

• Accelerating inflation, increased global macro-uncertainty, major currency fluctuations and higher interest rates;

• Potential economic impact and disruption of global pandemics;

• War or other geopolitical conflicts, disruptions and potential costs thereof;

• Other macroeconomic, industry and competitive developments;

• Timing and value of new, renewed and existing patent licensing agreements with smartphone vendors, automotive companies, consumer electronics companies and other licensees;

• Results in brand and technology licensing; costs to protect and enforce our intellectual property rights; on-going litigation with respect to licensing and regulatory landscape for patent licensing;

• The outcomes of on-going and potential disputes and litigation;

• Timing of completions and acceptances of certain projects;

• Our product and regional mix;

• Uncertainty in forecasting income tax expenses and cash outflows, over the long-term, as they are also subject to possible changes due to business mix, the timing of patent licensing cash flow and changes in tax legislation, including potential tax reforms in various countries and OECD initiatives;

• Our ability to utilize our US and Finnish deferred tax assets and their recognition on our balance sheet;

• Our ability to meet our sustainability and other ESG targets, including our targets relating to greenhouse gas emissions;

as well the risk factors specified under Forward-looking statements of this release, and our 2022 annual report on Form 20-F published on 2 March 2023 under Operating and financial review and prospects-Risk factors.

FORWARD-LOOKING STATEMENTS

Certain statements herein that are not historical facts are forward-looking statements. These forward-looking statements reflect Nokia's current expectations and views of future developments and include statements regarding: A) expectations, plans, benefits or outlook related to our strategies, product launches, growth management, licenses, sustainability and other ESG targets, operational key performance indicators and decisions on market exits; B) expectations, plans or benefits related to future performance of our businesses (including the expected impact, timing and duration of potential global pandemics and the general or regional macroeconomic conditions on our businesses, our supply chain and our customers’ businesses) and any future dividends and other distributions of profit; C) expectations and targets regarding financial performance and results of operations, including market share, prices, net sales, income, margins, cash flows, the timing of receivables, operating expenses, provisions, impairments, taxes, currency exchange rates, hedging, investment funds, inflation, product cost reductions, competitiveness, revenue generation in any specific region, and licensing income and payments; D) ability to execute, expectations, plans or benefits related to changes in organizational structure and operating model; E) impact on revenue with respect to litigation/renewal discussions; and F) any statements preceded by or including "continue", “believe”, “commit”, “estimate”, “expect”, “aim”, “influence”, "will”, “target”, “likely”, “intend”, “may”, “could”, “would” or similar expressions. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from such statements. These statements are based on management’s best assumptions and beliefs in light of the information currently available to them. These forward-looking statements are only predictions based upon our current expectations and views of future events and developments and are subject to risks and uncertainties that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. Factors, including risks and uncertainties that could cause these differences, include those risks and uncertainties identified in the Risk Factors above.

ANALYST WEBCAST

• Nokia's webcast will begin on 19 October 2023 at 11.30 a.m. Finnish time (EEST). The webcast will last approximately 60 minutes.

• The webcast will be a presentation followed by a Q&A session. Presentation slides will be available for get at www.nokia.com/financials.

• A link to the webcast will be available at www.nokia.com/financials.

• Media representatives can listen in via the link, or alternatively call +1-412-317-5619.

FINANCIAL CALENDAR

About Nokia

At Nokia, we create technology that helps the world act together.

As a B2B technology innovation leader, we are pioneering networks that sense, think and act by leveraging our work across mobile, fixed and cloud networks. In addition, we create value with intellectual property and long-term research, led by the award-winning Nokia Bell Labs.

Service providers, enterprises and partners worldwide trust Nokia to deliver secure, reliable and sustainable networks today – and work with us to create the digital services and applications of the future.

Inquiries:

Nokia
Communications
Phone: +358 10 448 4900
Email: press.services@nokia.com
Kaisa Antikainen, Communications Manager

Nokia
Investor Relations
Phone: +358 4080 3 4080
Email: investor.relations@nokia.com

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• Nokia said on Thursday it is planning to cut up to 14,000 jobs — or around 16% of its workforce.
• The company is planning to lower costs by up to 1.2 billion euros by 2026.
• In a separate statement, the company said sales declined by 15% in the third quarter.

Finland-based mobile company Nokia is planning to cut between 9,000 to 14,000 jobs amid a sales slump and reduced demand for 5G equipment, it said on Thursday. The higher end of these cuts is likely to impact around 16% of the company's current global workforce of 86,000.

The layoffs are part of cost-cutting measures to reduce expenses by 400 million euros, or $421 million, in 2024 and a further 300 million euros in 2025. 

The company wants to reduce total costs by 1.2 billion euros by 2026.

In a separate statement, Pekka Lundmark, the CEO of Espoo-based Nokia, said that the company's third-quarter sales of 4.9 billion euros had declined by 15% compared to the previous year due to macroeconomic challenges and higher interest rates. 

The company reported operating profits of 424 million euros in the third quarter, a 36% drop from the same period last year.

"Resetting the cost base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness," Lundmark said.

Nokia — which sold its mobile phone business to Microsoft in 2014 — expects to meet the lower end of its sales targets in the third quarter, which were set in the range of 23.2 billion to 24.6 billion euros.

Nokia also slashed its outlook for the overall mobile networks market in 2023 and is now expecting a 9% reduction, compared to a previous forecast of a 2% drop. The company's slowing 5G growth in India could no longer compensate for the similar slowdown in North America, said Lundmark.

A Nokia spokesperson directed Insider to the company statement in response to a request for comment.