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Most Millennial Traders Weren’t Even Born When Nokia Crashed This Hard

Courtesy of ZeroHedge View original post here.

Nokia shares plunged 25% on Thursday after management warned its 2019/2020 profits would be disastrous after a delay in earnings from 5G networks, reported Bloomberg. As a result of the abrupt revision in outlook, the Finnish telecom network equipment maker cut its 2020 forecast and suspended a dividend to investors. 

Nokia says 2019 EPS is around 0.18 to 0.24 euros for 2019 and will be around 0.20 to 0.30 euros in 2020. Earlier this year, the telecom maker was expecting EPS to be about 0.25 to 0.29 euros for 2019, and 2020 EPS of 0.37 to 0.42 euros, a dramatic revision lower, which is what spooked investors to panic sell the stock into one of the worst declines in the company's history in nearly three decades. The last time Nokia puked this hard, most millennial traders weren't even born. 

Nokia shares down 23% this morning on weak earnings report, largest intra-day drop since 1991 pic.twitter.com/ikEjN47Rs1

— Justin McQueen (@JMcQueenFX) October 24, 2019

Nokia doesn't expect an earnings recovery until 2021, due to the loss of 5G market share by rivals that are outperforming it this year.  

  • NOKIA OYJ NOKIA.HE - SOLID Q3 AND EXPECTED STRONG Q4; LOWERING FULL YEAR 2019 AND FULL YEAR 2020 OUTLOOK DUE TO MARGIN PRESSURE AND ADDITIONAL INVESTMENT NEEDS

  • NOKIA OYJ NOKIA.HE - WE ARE ADJUSTING OUR TARGETS FOR FULL-YEAR 2019 AND 2020; AND WE EXPECT OUR RECOVERY TO DRIVE IMPROVEMENT IN OUR 2021 FINANCIAL PERFORMANCE RELATIVE TO 2020.

  • NOKIA OYJ NOKIA.HE - SOME OF RISKS THAT WE FLAGGED PREVIOUSLY RELATED TO INITIAL PHASE OF 5G ARE NOW MATERIALIZING

The abrupt change in the forecast comes as macroeconomic headwinds are continuing to pressure telecoms and technology companies across Europe. The news of Nokia lower its outlook also sent Swedish rival Ericsson AB down by more than 4%. 

Bloomberg notes one of the significant contributors to the revision of the outlook is due to Nokia "no longer expects to win a bigger piece of the 5G market by outperforming rivals this year and over the long term — the new outlook has the company performing in line through 2020."

"Some of the risks that we flagged previously related to the initial phase of 5G are now materializing," CEO Rajeev Suri said in a statement, pointing to price competition and the steep cost of products. Nokia will now spend more on developing 5G products and making them less expensive, he said. "We expect that we will be able to progressively mitigate these issues over the course of next year."

The depressing outlook for Nokia wasn't unexpected, but it was the extent of the downgrade and the delay of an earnings turnaround that cause the stock to plummet. 


 

 

 


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