By Dominic Chopping
Nokia reported a sharp rise in sales of its network infrastructure equipment on surging demand from artificial intelligence and data-center customers.
However, softer guidance for the year ahead disappointed investors and sent shares 5.8% lower in early European trade.
Under new Chief Executive Officer Justin Hotard, the Finnish telecom-equipment provider has moved to diversify and seek growth outside of its traditional telecom-operator market, repositioning itself to take advantage of the explosive growth in AI and data centers.
To aid the new strategy, Hotard has consolidated the company's operating model into two main units; a mobile infrastructure division that houses its traditional mobile-communication technology and services business, and a network infrastructure segment that provides AI and data-center networking technology.
The company said Thursday that network infrastructure sales rose 19% on year, driven by demand from AI and cloud customers.
"Looking ahead to 2026, our focus is on disciplined execution to capture growth in AI & Cloud, and increase efficiency," Hotard said. "We see strong demand trends in network infrastructure as we ramp new products expanding our presence in AI & Cloud and invest for long-term growth."
Fourth-quarter sales of Nokia's mobile networks equipment fell 1.7% on year, with the company noting growth in the Middle East, Japan and Indonesia, but lower sales in North America. Overall, the business continues to stabilize though, and the gross margin rose to 40.1% in the quarter from 37.3%, it said.
For the year ahead, the company said it expects group comparable operating profit of between 2 billion and 2.5 billion euros ($2.39 billion-$2.99 billion), versus 2.02 billion euros it achieved in 2025.
Analysts at J.P. Morgan said the 2.25 billion euro midpoint of the new guidance compares to consensus at 2.37 billion euros, which implies a 5% miss.
"For 2026, we expect to see consensus down to reflect the guidance - on operating profit, we expect mid-single digit downgrades to consensus," the analysts said in a note to clients.
Nokia posted an 11% drop in fourth-quarter group comparable net profit attributable to shareholders to 880 million euros, beating the 834 million euros expected in a FactSet poll.
Sales rose to 6.13 billion euros against the 6.11 billion-euro FactSet estimate.
The company expects first-quarter sales to decline somewhat more than normal seasonal pattern, with an operating margin only slightly higher than the prior year.
In a separate announcement Thursday, Nokia said that board Chair Sari Baldauf will step down, with board member Timo Ihamuotila proposed for election as the new chair. At the same time, Meredith Whittaker, president of Signal Technology Foundation, is proposed for election as a new board member.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
January 29, 2026 04:05 ET (09:05 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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