Nokia (HE:NOKIA) Corporation (NYSE:NOK) issued its financial and strategic outlook for the coming days at the Capital Markets Day presentation on Nov 14. Going forward, the company plans to substantially increase its dividend as well as focus on reducing costs.
Business Opportunities
Nokia insisted that it will seek to streamline its cost of sales. Notably, the company has raised its cost savings guidance from EUR 1.2 billion to EUR 1.7 billion. It has also stated that it will look forward to invest in cable access markets as well as its enterprise businesses.
Nokia has been witnessing significant synergies from its recent purchase of Alcatel-Lucent (PA:ALUA). The core focus areas for the combined entity is likely to be next-generation 5G wireless technology, IP and software, defined networking, cloud-based solutions, big data analytics, and sensors and imaging.
Also, the merged entity can effectively leverage the emerging Internet of Things (IoT) platform and will be able to deliver competent triple-play voice, video and data solutions globally. Also, Nokia will be able to benefit from Alcatel-Lucent’s strong foothold in China as well as its veritable client list, which includes Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) .
However, Nokia expects its Networks business to decline in line with the primary addressable market in 2017. The company also expects operating margin to be in the range of 8%-10%. Intense competition from the likes of Cisco Systems (NASDAQ:CSCO) and drab market conditions are some of the major factors that are likely to hurt revenues. However, revenues from Digital Health and Digital Media are expected to increase year over year in full-year 2017, primarily supported by increased adoption of Digital Health and Digital Media products.
Higher Dividends
Nokia also stated that it wants to raise its dividend payout by 40–70%. For the current year, the company aims for a dividend per share of EUR 0.17, subject to shareholder approval.
Nokia has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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