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Nokia Oyj (NOK) Q2 2024 Earnings Call Transcript

AInvestSaturday, Jul 20, 2024 11:25 am ET
1min read

Focus on key themes and trends

Nokia's Q2 2024 earnings call provided insights into the company's financial performance and strategic initiatives. The call was marked by discussions on the challenging market conditions, the company's cost-saving program, and the planned acquisition of Infinera.

The company reported an 18% year-on-year decline in top-line revenue, largely attributed to India's peak 5G deployment in the previous year. However, the order intake trends showed promising signs of improvement, with orders growing year-on-year and the book-to-bill ratio above 1. This bodes well for the company's expectations of a significant improvement in net sales in the second half of 2024.

The call also highlighted the company's deal traction across its business groups, particularly in network infrastructure and mobile networks. Notable mentions include wins with MEO in Portugal and expansion of shares at existing customers. In addition, the company's cloud and network services are making progress on winning core network deals and with the Network as Code platform.

Key shareholders' questions and investor sentiments

The earnings call also provided valuable insights into the concerns and expectations of key shareholders. Francois-Xavier Bouvignies from UBS questioned the steep recovery expected in the second half of the year, particularly in Network Infrastructure. Sandeep Deshpande from J.P. Morgan asked about the reasons for the strong revival in the second half, attributing it to a combination of order momentum, seasonality, and the expectation of market recovery.

Trends within the sector

Nokia's earnings call also shed light on trends within the sector, particularly in the context of the company's planned acquisition of Infinera. This transaction is expected to significantly increase the scale and profitability of Nokia's optical networks business, enabling faster innovation and expanding its position in North America.

Tone, language, and sentiment

The tone and language used by Nokia's management team during the call were positive and confident, signaling strong leadership and a positive corporate culture. The company's focus on cost savings and strategic acquisitions reflects a proactive approach to addressing market challenges and positioning for long-term growth.

Red flags and warning signs

Despite the positive outlook, there were also cautious notes. The company's full-year outlook is unchanged, but it is tracking towards the midpoint or slightly below the midpoint of its comparable operating profit guidance. This underscores the challenges facing the company, particularly in the context of market volatility and competitive pressures.

Conclusion

Nokia's Q2 2024 earnings call provided a comprehensive overview of the company's financial performance and strategic initiatives. The company's focus on cost savings, strategic acquisitions, and market recovery highlights its commitment to addressing challenges and positioning for long-term growth. However, the call also underscored the need for continued vigilance in navigating market volatility and competitive pressures.

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