5G Is Surging But Nokia Falls

Bids from AT&T (NYSE:T) and Verizon (NYSE:VZ) for the 5G spectrum are a reminder that the high-speed, low-latency network upgrade is in play. Nokia’s (NYSE:NOK) weak quarter suggests that it is facing stiff competition.

GameStop (NYSE:GME) sent NOK stock to unheard of multi-year highs on Jan. 27. Chances are low that the stock will get there again. The company posted revenue falling 4.8% to EUR 6.57 billion. The gross margin of 39.2% is strong while the operating margin of 7.2% is weak. For 2021, the company forecast operating margin in the 7-10% range.

Nokia will assess its dividend policy in one year. That is a long wait. Income investors already sold their holding and growth investors are selling, too. The weak results and light outlook are highly disappointing. The lower revenue in the report shows that Nokia is losing to Chinese competitors and Ericsson (NASDAQ:ERIC).

Nokia will have to cut more jobs. It should slim down its management, too. This appears improbably. Recently, the firm added management layers, which will only slow its response time to change. Competition is picking up steam.

Nokia still needs to work through the Alcatel-Lucent acquisition. Unless it can post contract wins in China, the firm is too inefficient to win the 4G to 5G conversion. Investors should invest elsewhere.