Nokia earnings beat estimates as data centre pivot shows promise

[ZURICH] Nokia reported first-quarter adjusted profit that beat analyst forecasts, as its push into artificial intelligence and cloud software paid off.

Adjusted operating income was 281 million euros (S$420 million) in the period, the Espoo, Finland-based company said on Thursday (Apr 23). That compares with an average analyst estimate of about 244 million euros, according to data compiled by Bloomberg.

Net sales were 4.5 billion euros for the quarter, compared with an analyst estimate of 4.6 billion euros.

The company “delivered a solid start to the year”, Nokia’s CEO Justin Hotard said. The company is tracking “above the mid-point” of its full-year guidance of two billion euros to 2.5 billion euros, he said.

Nokia streamlined its business late last year to focus on connecting AI data centres, banking on a global spending boom to fuel sales. It had focused on supplying the backbone kit for mobile phone networks, an area that has stagnated in recent years as anticipated carrier spend on upgrades failed to materialise. Chipmaker Nvidia took a US$1 billion equity stake in Nokia last year and will supply the company with AI-powered computers for wireless networks.

The quarter’s earnings are the first under Nokia’s new structure, and reflect the reorganisation of its business into two units. Network Infrastructure comprises the AI data centre connectivity arm, while Mobile Infrastructure encompasses its legacy mobile equipment business. It hived off most of its remaining, non-core arms into a portfolio businesses segment, while its defence business became a standalone incubation unit.

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Nokia’s shares have almost doubled over the last year, driven by investor optimism around its AI pivot.

While the company hopes to profit from the increasing demand for AI enabling compute, its biggest European rival Ericsson, warned of rising costs for chips due to an increase in demand when it reported earnings below analysts’ expectations last week. BLOOMBERG