Nokia Stock Alert: Why Are NOK Shares Down Despite Dividend, Buyback News? – InvestorPlace

Nokia Stock Alert: Why Are NOK Shares Down Despite Dividend, Buyback News? – InvestorPlace

Shares of Nokia (NYSE:NOK) stock are trending lower today despite the Finnish telecommunications company announcing that it is reinstating its dividend and undertaking a stock buyback program.

Source: rafapress /

Why? News of the dividend and share buyback wasn’t enough to overcome the fact that Nokia’s fourth-quarter revenue fell 2% to 6.41 billion euros, missing expectations of 6.47 billion euros. Its revenues were hurt by the fact that longtime-customer Verizon (NYSE:VZ) awarded a multibillion-dollar 5G wireless contract to rival Samsung in the quarter.

Nokia has struggled with its global rollout of fifth-generation (5G) wireless networks, which has prompted several management changes at the company.

What Happened With Nokia Stock

Nokia did its best to gloss over its Q4 earnings miss by announcing the reinstatement of its dividend and share buyback program, as well as mixed forward guidance. The company now forecasts annual revenue between 22.6 billion euros and 23.8 billion euros. It also set a target for its operating margins of at least 14% by 2023.

This guidance wasn’t enough though. That’s because analysts already expected revenue of 23.06 billion euros for 2022. That means Nokia’s range is not exactly confidence-inspiring heading into the new year.

Year to date, NOK stock is down 6.5% at $5.82 a share, and is barely keeping its head above the $5 penny stock threshold.

Why It Matters

Nokia, which suspended its dividend in 2019 even before the Covid-19 pandemic, said it will now provide shareholders with 8 euro cents per share for 2021. The company also announced plans to repurchase 600 million euros worth of its own stock in the coming year. While dividends and share buybacks are normally greeted enthusiastically by shareholders, they could not overcome the company’s lukewarm earnings and guidance.

The latest results come as Nokia fights for global market share in the 5G wireless space against rivals Ericsson (NASDAQ:ERIC) and Huawei. Pekka Lundmark was brought in as chief executive of Nokia in 2020 to get the company’s 5G business back on track. Since taking over the top role, Lundmark has cut costs and increased spending on research and development of 5G technology.

However, Nokia’s fourth quarter results show the company is still struggling to find its footing in 5G. During the release of the financial results, Lundmark said Nokia is looking at potential acquisitions this year as a means of strengthening its technology and competing more aggressively against archrival Ericsson.

What’s Next for NOK

Despite news of a dividend and share buyback program, Nokia is unlikely to escape its subpar Q4 earnings print. Nokia stock is likely to slump today following its latest financial report. Key to a meaningful recovery will be for Nokia to beat analyst expectations for its quarterly revenue and earnings per share (EPS), and to demonstrate that it is truly able to compete in the global 5G wireless market. Experts estimate this market to be worth $65.49 billion by 2026.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.