Log in
Show password
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 
  1. Homepage
  2. Equities
  3. Sweden
  4. Nasdaq Stockholm
  6. News
  7. Summary
    ERIC B   SE0000108656


SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

Analysis: 5G underdog Nokia firmly back in game after Lundmark's shakeup

07/26/2021 | 08:03am EDT
FILE PHOTO: The Nokia logo is seen on a smartphone in front of a displayed stock graph in this illustration

STOCKHOLM/HELSINKI (Reuters) - Shifting geopolitics and a sharp round of cost cutting have put Nokia firmly back in the global 5G rollout race just a year after CEO Pekka Lundmark took the reins at the Finnish company.

Considered a 5G underdog after betting on the wrong type of chips and losing a multi-billion Verizon contract to Samsung, Nokia has more recently been gaining ground on arch-rival Ericsson, even as both benefit from U.S. pressure on European governments to crackdown on China's Huawei.

Lundmark in February warned of a "challenging" year of transition with "meaningful headwinds", but two good quarters have rekindled hopes of a turnaround and Nokia said earlier this month that it will raise its full-year outlook when it reports second-quarter results on Thursday.

"The drastic changes and improved performance under Pekka's stewardship is clearly evident," said Paolo Pescatore, an analyst at PP Foresight. "Opportunities in 5G, misfortunes of others and focus on key products have helped reignite the business."

Lundmark, who became CEO last August, has laid off thousands of employees and forged new partnerships with technology companies after pledging to "do whatever it takes" to take the lead in 5G.

Nokia has also invested significantly in its Reefshark chipset, cutting the end cost of its 5G equipment, and given its business units more autonomy over where they choose to compete.


As the overhaul bears fruit, the geopolitical backdrop has shifted further in Nokia's favour.

European governments have long been tightening controls on the role of Chinese companies in 5G networks following diplomatic pressure from Washington, which alleges Huawei equipment could be used by Beijing for spying. Huawei has repeatedly denied being a national security risk.

While both Nokia and Ericsson have been gaining customers that might otherwise have gone to Huawei, Ericsson had been faring better with big contract wins in China, where the deployment of the next-generation network is in full swing.

But its China business has taken a tit-for-tat hit since Sweden late last year banned Chinese companies from supplying critical 5G network equipment.

In a second phase of 5G deployment by China Mobile last week, Ericsson's 5G radio share dropped from over 11% to about 2%, and Nokia got its first Chinese 5G deal with a 4% share of a $6 billion contract, according to sources.

It is also expected to win a portion of upcoming contracts from China Unicom and China Telecom at the expense of Ericsson, having failed to make any headway in the world's biggest 5G market last year.

"The key was making the right moves to correct the actions that really got them behind 5G," said Mark Cash, an analyst with Morningstar. "I think Pekka's imprint is being felt already by the organisation, and he's obviously doing well."

Nokia's shares have gained around 30% in the last year, while Ericsson's are up just 2% over the same period.

Company insiders say Lundmark's working relationship with Chairwoman Sari Baldauf helped steady the ship when several top executives left the company during a reshuffle in the first months of his tenure, and is gaining him wider support for the overhaul of Nokia.

The pair have a long history of working together, including most recently in the same roles at Fortum.


It may not all be plain sailing.

While Nokia, Ericsson and Huawei are currently the only companies providing complete 5G wireless networks, the U.S. government for one is now touting a new, more open approach, allowing mobile operators to mix and match equipment from various suppliers and potentially securing U.S. companies a bigger share of the market.

China, however, remains far ahead of other countries for 5G deployment - the China Mobile contract for about 500,000 base stations was for more than all the 5G base stations currently in Europe - with competition driving volume and lowering overall costs.

Nokia may swerve Ericsson's current hurdles in the country as Huawei has said that a law approved by Finland allowing authorities to ban telecom equipment for national security reasons is a more realistic approach than focusing on specific vendors.

But some analysts caution that being in China could drag on Nokia's margins and any new geopolitical tussles lead to significant losses.

Kimmo Stenvall, an analyst from OP Markets, also said that Nokia's updated outlook would likely take into account the global chip shortage with not enough semiconductors to go around.

(Reporting by Supantha Mukherjee in Stockholm and Essi Lehto in Helsinki; Editing by Kirsten Donovan)

By Supantha Mukherjee and Essi Lehto

ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
ERICSSON -0.35% 96.01 Delayed Quote.-1.32%
NOKIA OYJ -0.61% 4.6255 Delayed Quote.47.70%
All news about ERICSSON
09/20ERICSSON : to Upgrade Viaero Wireless' Network Equipment
09/09US Court Indicts Former Ericsson Staff Over Bribery Scandal in Djibouti
09/08ERICSSON : U.S. charges former Ericsson employee over bribery scheme
09/08TPG TELECOM : and Ericsson announce 5G Core partnership for standalone 5G networks
09/08ERICSSON : boosts Network Services portfolio with Intelligent Deployment
09/08ERICSSON : and Unikie optimize factory parking with a 5G private network and automation
09/07Investor AB Subsidiary Buys Defibrillator Distributor Allied 100 for $290 Million
09/06Ericsson Appoints Andres Vicente as Iberia CEO, Effective 01 October 2021
09/06Ericsson CEO To Not Give Up On China Easily
09/03Exclusive-Ericsson CEO to double down on China as 5G tussle rumbles on
More news
Analyst Recommendations on ERICSSON
More recommendations
Sales 2021 234 B 26 877 M 26 877 M
Net income 2021 18 331 M 2 108 M 2 108 M
Net cash 2021 33 725 M 3 878 M 3 878 M
P/E ratio 2021 17,5x
Yield 2021 2,21%
Capitalization 320 B 36 819 M 36 768 M
EV / Sales 2021 1,22x
EV / Sales 2022 1,13x
Nbr of Employees 101 624
Free-Float 89,4%
Duration : Period :
ERICSSON Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends ERICSSON
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 24
Last Close Price 96,01 SEK
Average target price 129,23 SEK
Spread / Average Target 34,6%
EPS Revisions
Managers and Directors
Erik B÷rje Ekholm President, Chief Executive Officer & Director
Carl Mellander CFO, Senior VP & Head-Group Function Finance
Ronnie Leten Chairman
Erik Ekudden Chief Technology Officer & Senior Vice President
Xavier Dedullen Secretary, Chief Legal Officer & Senior VP
Sector and Competitors
1st jan.Capi. (M$)
ERICSSON-1.32%36 920
CISCO SYSTEMS, INC.24.89%235 729
NOKIA OYJ47.70%30 837