Summary of Nokia's Conference Call Company Overview - **Company**: Nokia - **Industry**: Telecommunications and Network Infrastructure Key Points and Arguments Network Infrastructure Focus - Nokia is focusing on capitalizing on opportunities in network infrastructure, particularly in IP switching and optical networking, with a growth guidance of 10%-12% in these areas [6][8][12] - The integration of Infinera is aimed at enhancing competitiveness in AI and cloud sectors, shifting focus from traditional telco reliance [6][7] Growth Guidance and Market Position - The guidance for Network Infrastructure (NI) growth is set at 6%-8%, with optical and AI components expected to grow more than 10% [8][12] - Nokia's market exposure is currently more aligned with telcos than with cloud service providers (CSPs), which may limit growth potential in certain segments [12][13] Capital Allocation Strategy - Nokia plans to maintain investments in telcos while also focusing on AI and cloud opportunities driven by hyperscalers [17][18] - The company aims to balance investments between traditional telco services and emerging AI-driven technologies [17][19] Backlog and Customer Engagement - The backlog consists of multiple customers with longer order durations, indicating a growing demand for optical solutions [21] - Nokia emphasizes the importance of executing orders and maintaining customer commitments over mere customer announcements [22] Competitive Landscape in IP and Optical Markets - Nokia acknowledges the challenges in gaining market share in IP switching and routing due to established competitors but sees opportunities through co-development with customers [24][25] - The company is focused on enhancing its software stack and tooling to differentiate itself in the market [24][26] Profitability and Cost Management - Nokia is committed to improving profitability in the optical segment by focusing on cost targets and pricing discipline [28][29] - The integration of Infinera is expected to enhance scale and reduce costs, making Nokia more competitive against peers like Ciena and Huawei [29] U.S. Manufacturing and Supply Chain Strategy - The establishment of U.S. manufacturing is seen as strategic for winning business and enhancing supply chain resilience [30][31] - Nokia is investing in regionalization of manufacturing to align with demand and improve agility in supply [31][32] Mobile Infrastructure Importance - Nokia views mobile infrastructure as critical for future connectivity needs, especially with the rise of AI, autonomous vehicles, and other technologies requiring reliable networks [36][37] - The company is transitioning to a more software-driven business model in mobile networks to enhance profitability and adaptability [40][41] Partnership with NVIDIA - The partnership with NVIDIA is expected to yield benefits starting in 2026, with initial commercial deployments anticipated in 2027 [42][43] - Nokia aims to capture value in the AI space by focusing on software enhancements rather than solely on hardware [46][47] Market Perception and Communication - There is a need for better communication regarding Nokia's role as a critical infrastructure provider, moving beyond its historical association with mobile phones [63][64] - The company is focused on reshaping its narrative to highlight innovations and investments in core infrastructure and services [64] Additional Important Insights - Nokia's historical performance has led to a cautious approach in setting growth targets to ensure realistic and achievable expectations [15][39] - The company recognizes the need for telcos to innovate to improve returns and is positioning itself as a partner in this transformation [39][40]

By Gianluca Lo Nostro (Reuters) -Nokia unveiled a new strategy on Wednesday focused on artificial intelligence, as it strives to simplify its business and boost ​annual core profit by as much as 60% over the next three years. Beginning ‌in 2026, the Finnish telecoms equipment maker intends to reorganize into two primary businesses: network infrastructure, dedicated to ‌AI and data centres, and mobile infrastructure, focused on core telecoms activities. The company is now targeting annual comparable oper ...

Core Viewpoint - Nokia and Nscale have formed a partnership to enhance the development of AI infrastructure, with Nokia becoming a preferred partner for advanced networking technologies in Nscale's AI-ready data center deployments globally [1][2][8]. Group 1: Partnership Details - The partnership will see Nokia join other investors in Nscale's Series B investment round, aimed at building scalable and secure AI infrastructure to meet the increasing demand for AI-ready data centers [2][8]. - Nokia will provide a comprehensive portfolio of networking technologies, including data center switching, IP routing, and optical networking, to support the build-out of AI clusters at scale [3][8]. - Both companies will collaborate on innovation in the networking stack used in AI clusters and engage in joint deployment initiatives globally [4][8]. Group 2: Leadership Insights - Justin Hotard, President and CEO of Nokia, emphasized the accelerating demand for secure and scalable AI infrastructure and highlighted the synergy between Nokia's networking expertise and Nscale's infrastructure platform [5]. - Josh Payne, CEO of Nscale, noted the importance of strong partnerships in building the next generation of AI infrastructure and expressed confidence in Nokia's proven networking technologies [5].

Core Insights - Nokia Corporation reported weaker-than-expected second-quarter 2025 results, with both revenue and net income missing the Zacks Consensus Estimate. The top line increased year over year due to growth in fixed and optical networks within the Network Infrastructure segment, alongside improvements in Cloud and Network services. However, weakness in Mobile Networks offset these gains [1][12]. Financial Performance - Net income from continuing operations was €83 million ($94.12 million) or €0.02 (2 cents) per share, down from €370 million or €0.07 in the same quarter last year. The decline was attributed to lower net sales from Mobile Networks and higher operating expenses [2]. - Comparable profit was €236 million ($267 million) or €0.04 (5 cents) per share, down from €328 million or €0.06 in the year-earlier quarter, missing the Zacks Consensus Estimate of 7 cents [3]. - Quarterly net sales reached €4.54 billion ($5.15 billion), a 2% increase from €4.46 billion in the previous year, but missed the Zacks Consensus Estimate by $5.36 billion [4]. Segment Performance - Net sales from Network Infrastructure totaled €1.9 billion ($2.15 billion), up from €1.52 billion in the year-ago quarter, beating the revenue estimate of €1.75 billion. IP Networks recorded 3% growth year over year, driven by demand in China, Europe, and the Americas [5]. - Mobile Networks generated revenues of €1.73 billion ($1.82 billion), down 17% year over year, missing the estimate of €1.94 billion due to soft demand in various regions [6]. - Cloud and Network Services reported net sales of €557 million ($631 million), up 10% year over year, but missed the estimate of €755 million [7]. - Nokia Technologies contributed €357 million ($404 million), slightly up from €356 million in the previous year, supported by a recent licensing agreement [8]. Regional Performance - Net sales from the EMEA region increased to €1.954 billion from €1.839 billion in the year-ago quarter, while APAC revenues declined to €1.02 billion, down 3% year over year due to Mobile Networks weakness [9][10]. Operational Metrics - The comparable gross margin was 44.7%, matching the previous year's figure, while the comparable operating profit decreased 29% year over year to €301 million ($341 million) [13]. - Nokia generated €209 million ($237 million) in net cash from operating activities, down from €489 million in the prior-year quarter. As of June 30, 2025, the company had €4.79 billion ($5.63 billion) in cash and cash equivalents [14]. Future Outlook - For 2025, Nokia expects a comparable operating profit in the range of €1.9-€2.1 billion, with free cash flow estimated at 50-80% of comparable operating profit. Capital expenditure is projected to be €650 million [15]. - The company anticipates strong sales growth in the Network Infrastructure and Cloud and Network Services segments, while expecting stable net sales from the Mobile Networks segment [16].