Nokia plans to raise guidance after strong Q2

Things are looking up for Nokia in 2021. After struggling in recent years because of setbacks with 5G products, among other things, in April the Finnish vendor was able to report its strongest quarterly sales performance in six years.

While still early days, a turnaround plan seems to be working. Nokia certainly seems to think so: It has just revealed that business remained pretty strong in the second quarter of 2021 and said its expectations have now improved for the full year. What's more, it plans to revise upwards its guidance later this month.

More will be known when Nokia publishes its second-quarter and half-year financial results and revised full-year 2021 guidance on July 29, 2021. The vendor had earlier projected 2021 net sales of €20.6 billion to €21.8 billion ($24.4 billion-$25.85 billion) and an operating margin of between 7% and 10%.

Pekka Lundmark, chief executive of Nokia, certainly seems to be in bullish mood. He said the vendor is "progressing well with our three-phased plan to achieve sustainable, profitable growth and technology leadership laid out at our Capital Markets Day in March."

Lundmark particularly highlighted improvements in cost control and "strength in a number of our end markets."

However, the good news comes with a caveat: "We continue to expect some headwinds in the second half as we have previously highlighted but our performance in the first half provides a good foundation for the full year," Lundmark said.

On the up

Overall, the news has been welcomed by the markets. Nokia's share price rose at the start of trading today, and continues to hover just below the €5 mark.

Kimmo Stenvall, equity analyst at OP Corporate Bank, told Reuters that "the market is already close to the top of the guidance in both revenue and margin. Nokia has just hosted a capital markets day and issued long-term targets/guidance and now had two very strong quarters."

It does seem that Nokia is about to emerge into the light after spending a long time in quiet catch-up mode, offering 5G products that can at least rival those of major rivals Ericsson and Huawei and placing a particular focus on open RAN. The vendor has of course not been hurt by the global discord over the role of Huawei in 5G.

Gabriel Brown, a principal analyst with Heavy Reading (a sister company to Light Reading), has previously stressed that a market with such a limited number of suppliers could do with a stronger Nokia.

"The industry needs Nokia to be really competitive," Brown told Light Reading in June. "This isn't just about Nokia."

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— Anne Morris, contributing editor, special to Light Reading

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