Benzinga - by Ananya Gairola, Benzinga Staff Writer.
Nokia Corporation (NYSE:NOK) has forecasted growth in its network infrastructure business in the second half of this year in conjunction with a substantial two-year share repurchase initiative.
What Happened: Nokia predicts its adjusted operating profit for 2024 to range from €2.3 billion to €2.9 billion ($2.5 billion to $3.2 billion), regardless of a challenging 2023 marked by sluggish 5G equipment adoption and patent payment litigation, reported Bloomberg, citing the company's statement given on Thursday.
The telecommunications giant saw a large dip in its net income last year, falling from €4.3 billion in 2022 to a mere €679 million. Revenue also decreased, declining from €24.9 billion to €22.3 billion.
Despite these setbacks, CEO Pekka Lundmark remains hopeful for the upcoming year, announcing a €600 million share buyback program to be rolled out over the next two years, despite acknowledging that the challenging environment of 2023 is likely to persist into the first half of 2024.
"Looking ahead, we expect the challenging environment of 2023 to continue during the first half of 2024, particularly in the first quarter," Lundmark said.
Earlier, Nokia concluded a 5G patent cross-licensing agreement with Oppo, effectively ending a long-standing dispute. Lundmark hinted that another similar dispute resolution is imminent.
Why It Matters: At the end of last year, Nokia projected it would miss its sales targets for 2023 due to ongoing licensing renewal discussions. These negotiations and customer spending limitations were expected to continue into 2024, affecting net sales, operating margin, and free cash flow.
Previously, it was reported that Nokia had signed a 5G patent agreement with Honor, marking its fourth major smartphone agreement in the past 12 months. However, it continues to engage in legal battles with other Chinese companies over patents.
The report noted that despite these developments, Nokia’s shares had dropped by 25% in the past 12 months as of Wednesday’s close.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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