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Nokia’s Struggling Networks Business Just Sent Its Stock Plunging

October 26, 2017, 12:04 PM UTC

Nokia’s share price fell by more than 15% on Thursday, after the company reported a continuing decline in its telecommunications equipment business that it said will run into next year.

In its third-quarter results, Nokia reported a 9% year-on-year drop in revenues from its networks business, including a 17% fall for its “ultra broadband networks” division. Overall, its revenues were down 7%.

Analysts had forecast operating profits of €432 million ($510 million) for Nokia’s networks business in the quarter. In the event, the profits were only €334 million.

“Despite the progress we made in the quarter, we experienced some challenges in our mobile networks business and see a continued decline in our primary addressable market in 2018,” CEO Rajeev Suri said in a statement.

He said Nokia estimated the continued decline to be in the 2-5% range. As for the reasons for the decline, Suri pointed to competition from Chinese competitors, “multiple technology transitions” and the impact of the ongoing consolidation trend in the telecoms operator sector.

“My team is fully committed to getting these things back on track and we are already seeing meaningful improvements,” Suri said, suggesting deployments of Nokia’s AirScale product line were ramping up.

Apart from the stiff competition provided by China’s Huawei, a major part of the problem for network equipment-makers such as Nokia and major European rival Ericsson is that operators around the world have already rolled out their 4G networks, and the technology’s successor—the still rather nebulous “5G”—is a few years away from reality.

AirScale is a line of mobile base stations that are supposedly “5G-ready” in that they include many advances that will be part of the standard when it is completed, such as “massive MIMO,” where one base station includes many antennas in order to provide carefully-calibrated coverage in dense deployments.