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Nokia shares slump on surprise losses

CEO Rajeev Suri remains upbeat about the tech giant's future prospects.

Nokia posted a loss despite a rise in sales to over five billion euros. Image: Jussi Nukari / Lehtikuva

Mobile networks provider Nokia's stock price fell by more than nine percent on Thursday. That followed the company's announcement of losses of 59 million euros in the first three months of the year. During the same quarter of last year, the firm posted a profit of 239 million euros.

Investors who had also expected a profitable start to this year apparently punished Nokia by selling off its shares. The share opened down by 9.15 percent on the Helsinki Stock Exchange on Thursday morning. By early afternoon the stock was down by 8.94 percent.

The losses came despite a two-percent rise in Nokia's net sales since the same period in 2018. Turnover exceeded five billion euros.

In a statement, the Espoo-based firm said that it had expected the first quarter to be weak, but that CEO Rajeev Suri remains optimistic about the rest of the year.

Huawei security worries could offer opportunity

"5G revenues are expected to grow sharply, particularly in the second half of the year, driven by our 36 commercial wins to date. Global services profitability should improve as we recover in a handful of large rollout projects," Suri said.

Nokia is sticking to a previous prediction that its non-IFRS operating margin, that is the ratio of operating profit to net sales, for the whole year will still be in the 9-12 percent range.

As Suri sees it, the competitive situation has become slightly more intense in some areas "as some competitors seek to be more commercially aggressive in the early stages of 5G and as some customers reassess their vendors in light of security concerns, creating near-term pressure but longer-term opportunity".

Chinese state-owned Huawei, Nokia's biggest rival in the mobile networks sector, has recently come under pressure over security concerns. The US and other countries have warned against using Huawei 5G networks, but on Wednesday the UK agreed to allow Huawei a restricted role in building parts of its 5G network.

5 new Nokia phones so far this year

According to the Wall Street Journal, in the first three quarters of last year Huawei had a 28 percent share of the global telecom-equipment market, followed by Nokia with 17 percent and Sweden's Ericsson at 13.4 percent.

Once the world's biggest phone manufacturer, Nokia stopped making handsets in 2013. Since 2016 HMD Global has produced Nokia brand phones under license. In February, HMD launched five new Nokia phones at the Mobile World Congress in Barcelona.