Telecommunications giants Nokia and Ericsson both saw sales decline in the final quarter of 2023, with tough economic conditions blaming network operators for weak spending. Ericsson expects another difficult year, but Nokia is hopeful that things will improve in the second half of the year.
Finland-based Nokia announced today that its net sales for the fourth quarter of the calendar year were 5.7 billion euros ($6.19 billion), down 23% from the same period last year. Operating profit fell 38% to 547 million euros ($549 million).
The “significant improvements” that Nokia saw in its Mobile Networks and Cloud and Network Services divisions were offset by lower contributions from Nokia Technologies.
Pekka Landmark, president and CEO, said Nokia’s full-year net sales declined 11% to 22.25 billion last year due to changes in customer behavior due to the economic environment and high interest rates. It said it led to 10,000 euros ($24.1 billion).
Although sales fell 23% in the fourth quarter due to a slowdown in demand for network kits, Landmark said Nokia “in the fourth quarter saw a significant improvement in orders, particularly for network infrastructure, and overall spending “It shows that the environment has improved, at least to some extent.” . ”
According to Lundmark, Nokia is making “good progress” in U.S. government initiatives in the fixed network space, and the company expects these programs to be net revenue positive from the second half of 2024 to 2025. That’s what it means. He also claimed that the company signed “new significant customers” for fixed wireless access products in Asia in the fourth quarter.
Lundmark expressed optimism about the near-term outlook.
“We expect the challenging environment of 2023 to continue in the first half of 2024, and particularly in the first quarter. However, we are currently seeing some bright spots, with order intake for network infrastructure and some specific areas improving. “We’re starting. It’s a deal we won,” he said.
Of the two giants, Nokia is the least likely given news in December that US carrier AT&T selected Ericsson in a $14 billion deal to upgrade its infrastructure with Open Radio Access Network (Open RAN) technology. It seems ironic that it seems more optimistic. AT&T accounted for ~8% of Nokia’s mobile sales in 2023.
Nokia sought to cut costs last year, laying off 14,000 staff. register According to reports at the time, this represented a 10 to 15 percent reduction in staffing.
Earlier this week, Sweden’s Ericsson reported a 16% drop in fourth-quarter revenue to SEK 71.9 billion ($6.9 billion) as network sales fell 23%.
Börje Ekholm, President and CEO of Ericsson, said: “As a result of focused execution and increased resilience, we were able to adapt to a difficult environment and delivered solid results in the fourth quarter. I was able to achieve this.”
He claimed that the network segment’s revenue declined as customers continued to focus on cash flow rather than investing in 5G. However, the CEO emphasized that Ericsson has achieved at least its break-even goal with its cloud software and cloud services. Enterprise sales increased 7% year over year, primarily driven by Enterprise Wireless Solutions.
“While the initiatives we have taken to improve our performance are paying off, we are not satisfied with our profitability and there is still more work to do. We expect markets outside of China to decline further due to similar uncertainties in 2023,” Ekholm said.
Last year, Ericsson reversed the layoffs of around 10,000 employees. ®
