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Nokia (NOK) Plans to Raise '21 View on Improved Market Conditions

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Nokia Corporation (NOK - Free Report) recently announced that it plans to revise its earlier guidance for 2021 on improved market conditions that propelled its business in the second quarter despite a challenging macroeconomic environment. The company will provide the updated guidance in concurrence with the second-quarter results, scheduled to be released on Jul 29, 2021.  

Earlier, Nokia expected net sales (adjusted for currency fluctuations) between €20.6 billion and €21.8 billion for 2021 with an operating margin of 7-10%. The company witnessed a solid pick up in sales in the second quarter, buoyed by a diligent execution of operational plans in order to achieve a sustainable and profitable growth. Nokia also benefitted from stringent cost-cutting measures and employee layoffs, while continuing to benefit from strategic partnership with diverse business entities. Consequently, the company intends to revise its outlook to better reflect the improving business conditions.

As the 5G ecosystem evolves with increased deployment across the globe, it is likely to offer a plethora of opportunities for various industries. The coronavirus outbreak has further highlighted the need for high-speed, high-bandwidth and low-latency connections — the hallmarks of the 5G network — for digital sustainability in the backdrop of social distancing and work-from-home trend. Amid this backdrop, Nordic telecommunications equipment manufacturers like Ericsson (ERIC - Free Report) and Nokia are increasingly gaining prominence at the expense of Huawei Technologies, as more and more countries are dropping the China-based firm from their 5G vendor list on perceived security risks.

Nokia is well positioned for the ongoing technology cycle given the strength of its end-to-end portfolio. Its installed base of high-capacity AirScale product, which enables customers to quickly upgrade to 5G, is growing fast. The company is driving the transition of global enterprises into smart virtual networks by creating a single network for all services, converging mobile and fixed broadband, IP routing and optical networks with the software and services to manage them. Leveraging state-of-the-art technology, Nokia is transforming the way people and things communicate and connect with each other. These include seamless transition to 5G technology, ultra broadband access, IP and Software Defined Networking, cloud applications and Internet of Things.

The company facilitates its customers to move away from an economy-of-scale network operating model to demand-driven operations by offering easy programmability and flexible automation needed to support dynamic operations, reduce complexity and improve efficiency. Nokia remains focused on building a robust scalable software business and expanding it to structurally attractive enterprise adjacencies. It has inked more than 165 commercial 5G contracts across the globe. The company’s end-to-end portfolio includes products and services for every part of a network, which are helping operators to enable key 5G capabilities, such as network slicing, distributed cloud and industrial IoT. Accelerated strategy execution, sharpened customer focus and reduced long-term costs are expected to position the company as a global leader in the delivery of end-to-end 5G solutions.

The stock has gained 35.8% in the past year compared with the industry’s rally of 48.7%.

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Nokia currently has a Zacks Rank #2 (Buy). Some other top-ranked stocks in the industry are Motorola Solutions Inc. (MSI - Free Report) and SeaChange International, Inc. (SEAC - Free Report) , both carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Motorola has a long-term earnings growth expectation of 9%. It delivered an earnings surprise of 11.6%, on average, in the trailing four quarters.

SeaChange International has a long-term earnings growth expectation of 10%. It delivered an earnings surprise of 12.2%, on average, in the trailing four quarters.

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