How did NOK's Q4 2023 earnings surprise impact investor confidence?

Nokia's Q4 2023 earnings report reflected challenges, including a negative EPS surprise, which likely dampened investor confidence due to concerns about financial performance and operational challenges.

1. **Negative EPS Surprise**: Nokia's Q4 2023 earnings per share (EPS) fell by -0.04, which was a surprise considering the market's expectations. This negative surprise indicates a decline in profitability for the period, which could lead to concerns among investors about the company's financial health and its ability to generate returns.

|code|Ticker|Name|Date|Net Income YoY|Net Income|market_code|
|---|---|---|---|---|---|---|
|NOK|NOK.N|Nokia|2023 Q1|29.3344315618019|3.142008E8|169|
|NOK|NOK.N|Nokia|2023 Q2|-34.46739234260986|3.15588E8|169|
|NOK|NOK.N|Nokia|2023 Q3|-66.38093354770483|1.407672E8|169|
|NOK|NOK.N|Nokia|2023 Q4|-101.08257698910465|-3.65046E7|169|

2. **Missed Sales Targets**: Nokia projected that it would not achieve its 2023 sales targets due to prolonged licensing talks. This news, coupled with the earnings miss, suggests operational challenges and strategic decisions that may have impacted investor confidence. The company's inability to meet sales targets could lead to questions about its market positioning and competitive strength.
3. **Strategic Decisions and Cost-Cutting Measures**: Nokia has announced plans to lay off up to 14,000 employees by the end of 2026 as part of resetting its cost base to protect profitability. Such significant restructuring efforts can be unsettling to investors, indicating deep-seated problems that may affect long-term viability. The market may interpret these moves as a sign of declining demand or inefficient operations, further eroding confidence.
4. **Innovation and Market Position**: Despite these challenges, Nokia has been innovating, as evidenced by the unveiling of its cutting-edge inventory management solution and advanced 25G PON sealed fiber access node. These developments suggest a forward-looking strategy to maintain a competitive edge. However, the impact of these innovations on short-term investor confidence may be overshadowed by the negative surprises in financial performance.
5. **Market Position and Long-Term Outlook**: Nokia's leadership in the XGS-PON equipment market and its enhanced flexibility in cloud RAN solutions indicate a strong market position and potential for long-term growth. Investors may view these strengths as a foundation for recovery, but the immediate focus is likely to be on the recent negative developments.

In conclusion, Nokia's Q4 2023 earnings surprise, coupled with missed sales targets and restructuring plans, is likely to have negatively impacted investor confidence in the near term. However, the company's innovation and market position may provide a basis for optimism in the long term.