Nokia Oyj CEO Pekka Lundmark yesterday said that he would do “whatever it takes” to catch up with rival telecommunications equipment manufacturers in introducing 5G wireless technology.
Lundmark, who took the top job on Aug. 1, would abandon predecessor Rajeev Suri’s strategy, dubbed “end-to-end,” the Finnish company said in a statement yesterday.
End-to-end sought to provide customers with complete network systems, from physical equipment, such as antennas and optical cables, to software and other services.
Nokia is to adopt “a more focused approach,” the company said, as it looks to break down how it sells to clients and target higher-value sectors.
Nokia shares yesterday fell more than 15 percent in Helsinki trading, after the company reported sales that missed analyst estimates and lowered its outlook for the year.
“We have lost share at one large North American customer — see some margin pressure in that market — and believe we need to further increase R&D [research and development] investments to ensure leadership in 5G,” Lundmark said. “In fact, we have decided that we will invest whatever it takes to win in 5G.”
The Espoo, Finland-based company is seeking to catch up with rivals Ericsson AB and Huawei Technologies Co (華為) after early stumbles in the market for 5G and trouble integrating its giant Alcatel-Lucent purchase from 2016.
Nokia reported sales in the third quarter of 5.29 billion euros (US$6.21 billion), missing analyst estimates for 5.42 billion euros.
The company is well placed to take advantage of bans on some vendors, Lundmark told reporters by telephone.
A growing number of governments are placing restrictions or outright exclusions on equipment made by Huawei.
Nokia, which a year ago paused its dividend to funnel more cash to R&D, said that payouts are likely to resume once its net cash position improves to about 2 billion euros.
Nokia said that it ended the second quarter with a net cash balance of 1.9 billion euros.
“Our goal is to better align with the needs of our customers and through that, increase accountability, reduce complexity and improve cost-efficiency,” Lundmark said.
Nokia downgraded its prospects, saying that it expects to underperform in a declining market.
It had previously said that it expected a “flattish” market for this year.
Next year, it expects an adjusted operating margin in the range of 7 to 10 percent, missing the average analyst estimate of 10.6 percent.
For this year, it now sees adjusted earnings per share of 0.20 euros to 0.26 euros, compared with 0.20 euros to 0.30 euros previously, and an adjusted operating margin of 8 to 10 percent, compared with an earlier 8 to 11 percent.
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