Nokia's third-quarter profit beat expectations despite chip shortages

Wireless and fixed-line networking equipment maker Nokia on Thursday reported third-quarter profit above analysts' expectations for higher 5G technology sales and lower costs, but the company warned that a global shortage of semiconductors makes market prospects murky and could stifle growth.

The Espoo, Finland-based company reported net profit of 463 million euros ($537 million) from July to September, up from 305 million euros a year earlier. Sales rose 2 percent to 5.4 billion euros.

Nokia shares, according to reports https://fx-exness.com/loginexness/, are trading at €4.96 apiece today.

CEO Pekka Lundmark said third-quarter results showed the company had another excellent quarter thanks to increased investment in 5G technology.

He noted that uncertainty about semiconductors limits the outlook for the fourth quarter and up to 2022. The semiconductor shortage has led to a shortage of chips for Nokia and its competitors' products.

"We could grow faster (in the third quarter) if enough components were available," Lundmark said during a conference call with reporters, adding that Nokia is working closely with its suppliers and customers to address semiconductor availability.

The chief executive pledged to make Nokia a global leader in 5G - the next generation of broadband technology - even if it means sacrificing short-term profitability. Nokia is in a tight race with Scandinavian rival Ericsson, China's Huawei and South Korea's Samsung, among others, for 5G technology.

Despite the booming market for 5G products, Lundmark acknowledged earlier this year that Nokia has faced problems in certain markets, such as the US, where the company has lost market share. Its penetration in the Chinese market has also remained low, despite Nokia's important 5G deal with key operator China Mobile this year.

Lundmark said on Thursday that headwinds in the US market were offset in the third quarter by strong growth in Nokia's fixed networks business, which he said benefited from the COVID-19 pandemic through a surge in sales of fixed broadband connections built in private homes. Sales of Nokia's fixed networks division rose 30% to 588 million euros compared to the previous quarter.