Nokia is banking on a strong second half of 2018 to save what has so far been a strained financial year. However, market share concerns could dampen a rebound.
As part of an investor call following the release of its second-quarter numbers, Nokia CEO Rajeev Suri tackled questions about the vendor possibly losing market share, a notion that Suri attempted to brush aside. Those questions were fueled by a recent deal between Verizon and Nokia’s Nordic rival Ericsson.
“Any suggestion that Nokia is losing share as a result of a fundamental issue of product competitiveness is simply incorrect,” Suri said, according to Bloomberg. “It might make for interesting competitor-fueled speculation, but it doesn’t reflect reality.”
“We still have a very strong position with Verizon and are working closely with them on 5G,” Suri said, though he did admit to losing contracts in a “small number” of Verizon markets.
“That is true, and it is unfortunate,” Suri said of the losses. “Verizon is a longstanding customer and we deeply value our relationship with them.”
As part of the vendor’s first-quarter release earlier this year, Suri said Nokia might see opportunities tied to ongoing geo-political issues impacting its China-based competitors Huawei and ZTE. However, recent political wrangling could see some of that opportunity evaporate.
Nokia’s overall second-quarter numbers underwhelmed, which followed a similar pattern set in the prior quarter. Its latest revenues were lower across the board compared with last year’s results. This included a 6 percent drop in sales and 68 percent plunge in net profits.
In prepared remarks, Suri said that results were in line with company expectations and that it was beginning to see a rebound during the latter part of Q2. He also reiterated the company’s full-year guidance based on surging 5G interest in North America and China.
“We expect market conditions to improve further in the second half, particularly in Q4, Nokia’s seasonally strongest quarter, and as 5G accelerates significantly,” Suri noted.
Outside of its work with Verizon, Nokia has a 5G deal in place with T-Mobile US, and it has been working on various trials with AT&T. The vendor has also signed 5G deals with a number of international operators, including China Mobile, NTT DoCoMo, Orange, Vodafone, Korea Telecom, SK Telecom, and Telefonica.
Nokia earlier this year cut 353 jobs in Finland as part of broader cost cutting efforts. The job cuts impacted the company’s networking and technology units.
The company’ stock was trading down more than 6 percent early Thursday.
Nokia’s downtrodden results come on the heels of Ericsson reporting a rebound. The carrier last week reported its first profitable quarter in a year and a half on increased revenues and lower operating costs.
Ericsson executives said there has been a dramatic acceleration in interest in 5G over the past 18 to 24 months and added that they are having much more “active” discussions with customers about 5G than they anticipated.
“We are seeing more traction with our customer discussions than the overall external market reports seem to indicate,” said Ericsson CEO Borje Ekholm.
Specifically, he said that North America seems to be very active in 5G, followed by Northeast Asia. “We will see early deployments there,” Ekholm said, adding that even the tone about 5G is changing in Europe where operators previously were more pessimistic about the technology.
Photo courtesy of Nokia.