Nokia Corporation NOK is gearing up to unveil its third-quarter 2024 financial results on October 17, prior to market open. In the previous quarter, the company disclosed adjusted earnings of 6 cents per share.

Expected to encounter a decline in revenue compared to the previous year, Nokia faces challenges due to weakening demand in various business sectors. Factors such as heightened competition, macroeconomic pressures, and geopolitical tensions are weighing on the company. Nevertheless, Nokia’s endeavors to strengthen its position in the 5G domain through innovation and expanding its product portfolio showcase optimism.

Rising and Falling Tides

During the third quarter, Nokia struck a longstanding pact with AT&T Inc., securing an undisclosed amount to revamp the fiber infrastructure for the telecommunications giant. Aligned with this agreement is the deployment of Nokia’s Lightspan MF and Altiplano platforms over five years, catering to the growing need for enhanced broadband services and increased capacity. An additional three-year collaboration with Vodafone Idea Limited in India aims to bolster 4G and 5G networks.

The company also inked a substantial contract with MEO, one of Portugal’s primary mobile operators, to modernize its network infrastructure. These alliances likely contributed positively to Nokia’s top-line during the quarter. In parallel, Nokia partnered with Telekom Malaysia to elevate data center connectivity leveraging a cutting-edge Dense Wavelength Division Multiplexing network. Homeplus, a broadband operator in Taiwan, embraced Nokia’s PON fiber solution to enhance network visibility and optimize end-user experience.

Further, TiM Brasil, a major telecom player in Brazil, utilized Nokia’s 5G AirScale portfolio to expand its 5G Radio Access Network coverage across the country. These strategic wins are anticipated to reflect positively in the third-quarter financials.

Conversely, a slowdown in 5G investments, particularly in regions like India, combined with heightened competition, is likely to impede Nokia’s revenue growth. Geopolitical tensions remain a significant challenge for the company.

Revenue estimates for the Mobile Networks unit are around €1.86 billion ($2.04 billion), indicative of a 13.6% year-over-year decrease. For Network Infrastructure, estimated revenues amount to €1.87 billion ($2.05 billion), signaling a 21.9% year-over-year growth. Additionally, Cloud & Network Services revenues are projected to stand at €789.3 million ($867.4 million).

The Zacks Consensus Estimate for Nokia’s total revenues in the September quarter is $5.10 billion, reflecting a decline from $5.42 billion in the corresponding period last year. Meanwhile, adjusted earnings per share are expected to reach 7 cents, compared to 5 cents in the prior-year quarter.

Faint Whispers of Earnings

Our predictive model does not definitively anticipate an earnings beat for Nokia this time. The likelihood of an earnings beat rises with a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or #2 (Buy) or #3 (Hold). Regrettably, this is not the scenario here.

Earnings ESP: The Earnings ESP, representing the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, currently stands at 0.00%, with both projected at 7 cents.

Zacks Rank: Nokia currently holds a Zacks Rank #2.

Exploring Alternatives

Consider these companies highlighted by our model, suggesting potential for an earnings outperformance this season:

Corning Incorporated GLW is slated to unveil its quarterly results on October 29, boasting an Earnings ESP of +1.16% and a Zacks Rank #3.

T-Mobile US, Inc. TMUS holds an Earnings ESP of +0.70% alongside a Zacks Rank #3, with quarterly results expected on October 23.

Qorvo Inc. QRVO showcases an Earnings ESP of +0.16% and carries a Zacks Rank #3, reporting financials on November 06.

Note: €1 = $1.09893 (period average from July 1, 2024, to September 30, 2024).

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