NOK Q4 2024: Raises 2025 EBIT Guidance to €1.9–2.4B on Strong Backlog
- Improved Visibility & Growing Order Backlog: Management noted that entering 2025, visibility is much better than a year ago with a steadily growing order backlog, suggesting robust future demand.
- Strategic Investment in High-Growth Markets: Nokia is ramping up its investments with an additional EUR 100 million in its IP Networks business aiming to drive incremental sales of EUR 1 billion by 2028, underpinning its data center and hyperscaler growth strategy.
- Resilient Mobile Networks Diversification: Despite challenges, Nokia reported net wins of 18,000 base station sites, while also positioning its Mobile Networks segment for growth through private wireless and defense opportunities, thereby mitigating headwinds.
- Mobile Networks underperformance: Persistent headwinds, such as the stated 4 percentage point decline from AT&T and the lack of clarity on margin recovery, raise concerns about the stability and growth potential of this key segment [Index 7].
- Integration and investment risks: Heavy reliance on acquisitions like Infinera—with planned additional investments of EUR 100 million and expectations of EUR 1 billion in incremental sales by 2028—introduces significant execution risk and uncertainty over synergy realization and cost control [Index 15].
- Slower-than-expected adoption in strategic segments: The muted pace of 5G standalone deployment and challenges in enterprise sales, which saw a 4% decline in constant currency, could hinder growth prospects in critical areas driving future revenue [Index 9].
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EBIT Guidance
Q: What drives your €1.9–€2.4B EBIT range?
A: Management explained the EBIT range hinges on market dynamics, recovering top‐line trends, and disciplined cost management with strategic investments, all pointing to improved operating profit. -
Mobile Margin
Q: Will MN gross margin remain near 38–39%?
A: They expect Mobile Networks margins to stay around 38–39% in 2025 after adjusting for one-offs, supported by stabilizing regional performance. -
Data Center Investment
Q: How will the €100M boost data center sales?
A: Management noted that ramping to a €100M annual investment aims to generate an additional €1B in revenue by 2028 through a blend of R&D and go-to-market efforts. -
Hyperscalers Trends
Q: What’s the near-term potential with hyperscalers?
A: They are optimistic about opportunities with hyperscalers—illustrated by deals with Microsoft—though detailed targets will be clearer after further integration steps. -
Tech Growth
Q: How significant are multimedia and video deals?
A: Management highlighted important new deals in video streaming with partners like HP and Samsung, boosting Nokia Technologies’ momentum in digital multimedia growth. -
MN Turnaround
Q: Is Mobile Networks truly turning around?
A: The team confirmed a balanced recovery with stabilizing CSP demand, strategic wins in base station contracts, and a cautious outlook despite competitive pressures. -
China Competitiveness
Q: Will US policies impact Chinese supplier technology?
A: They noted that potential US and EU regulatory actions might limit Chinese suppliers’ access to advanced silicon, yet specifics will depend on evolving policy decisions. -
Juniper Deal Impact
Q: Does the DOJ probe create competitive opportunities?
A: Management refrained from detailed comments but acknowledged that M&A disruptions can open opportunities for competitors, with no dramatic impact anticipated. -
BEAD Program
Q: What is the outlook for the US BEAD program?
A: They remain positive, citing early order wins and the favorable policy environment supporting domestic broadband manufacturing. -
Investment Allocation
Q: Is the €100M investment R&D focused or broader?
A: The additional spend will be allocated to both R&D and expanding go-to-market channels, ensuring balanced support for innovation and sales growth. -
5G Standalone Expansion
Q: Will 5G standalone core see rapid expansion?
A: They expect steady, gradual expansion in 5G standalone deployments among CSPs, with momentum building despite slower-than-expected early adoption.
Research analysts covering NOKIA.