Nokia reported a 20% drop in third-quarter sales due to plummeting 5G equipment demand
This week, Nokia revealed plans to cut 14,000 jobs — about 16% of its workforce — worldwide as part of broader cost reduction efforts, stemming from a poor third quarter.
Specifically, Nokia saw a 20% drop in third-quarter sales to 4.98 billion euros from 6.24 billion in the same three-month period last year. The cause, said the company, is plummeting 5G equipment demand, particularly in the United States, where its sales dipped a staggering 45%. In response, Nokia is aiming to cut 800 million euros ($843 billion) to 1.2 billion euros in costs by the end of 2026. It’s worth noting, however, that Nokia saw positive sale trends in India, the Middle East and Africa during the quarter.
Other takeaways from the company’s Q3 include an 18% decline in net sales from Network Infrastructure, as well as 24% decline year over year for IP Networks. Mobile Networks generated revenues of $2,347.3 million, down 24% year over year, and net sales from Cloud and Network Services were $807.4 million, down 7% year over year.
Nokia is not alone in the struggle, though, as Ericsson in February said it will also be cutting 8% of its global workforce — roughly 8,500 workers — and on Tuesday, the Swedish company said the market uncertainty is expected to continue into 2024.
Nokia CEO Pekka Lundmark, however, remains optimistic that long-term, market will pick up, citing emerging technologies that will rely on 5G infrastructure. “Cloud computing and AI revolutions will not materialize without significant investments in networks that have vastly improved capabilities,” he said in a statement.
