Ever since the advent of 4G mobile broadband equipment, telecoms network suppliers are fighting a harsh battle to cope with the rising demands of 4G networks. Amidst this era of struggle, Finnish multinational communications and information technology company Nokia, on Tuesday claimed that it is outperforming rival Ericsson, which recently sprung to the forefront of news for issuing a dramatic profit warning and ousting its chief executive.
Although Nokia’s shares fell as its dividend and profitability forecasts fell short of analysts’ expectations it claims to be doing sifnificantly better than its Swedish rival Ericsson.
Nokia, a brand which was once a fashion statement, bought its French rival company Alcatel-Lucent earlier this year in order to enhance its 4G capabilities. The company, at the acquisition of its rival said that its network equipment sales were likely to fall around 2 percent next year, in line with the broader market, and return to modest growth in 2018.
According to Nokia Chief Executive Rajeev Suri,
Nokia is not Ericsson. They are in crisis. We outperformed them in every area.
Well, that was a harsh statement to make, for as far as we know, Nokia’s own shares fell as much as 7.7 percent to a three-year low of 3.658 euros.
According to the company, cost cutting would help boost its network unit’s operating margin to 8-10 percent in 2017 from an estimated 7-9 percent in 2016 and to 10-15 percent in the long-term. It also said it planned a dividend of 0.17 euros per share for 2016.
But what the analysts polled by Reuters last month had expected was totally a different statistics. i.e. a 2017 margin of 10.5 percent and a dividend of 0.20 euros.
Nokia had also failed to achieve its target of 1.2 billion euros in net savings through 2018 after acquiring Alcatel-Lucent, which in turn disappointed some analysts who had hoped for an increase. But the acquisition did manage to expand Nokia’s business in fixed-line telecoms equipment and optical networks, which some analysts say may actually have helped it outperform Ericsson.