Nokia reported that it upgraded its long-term profitability target. The step is considered as an evidence that the strategy of Nokias Chief Executive Officer, Rajeev Suri, to concentrate on wireless-network equipment is paying off.
The CEO Suri said in a statement, cited by the Financial Times: “The rapidly evolving world of technology provides the context for Nokia’s vision and strategy: now it’s about connecting things as well as people, and we expect to see more than 50bn connected things – devices, modules and sensors – by 2025.”
The operating profit of Nokias networks division, which currently generates about 90% of total revenue, is projected to be within the range of 8% to 11% of sales. The previous operating profit target was placed in the range of 5% to 10% of sales.
Nokia also stated that its operating margin for the next year, which is calculated under non-IFRS accounting standards, is expected to be in line with the companys new long-term goal. Nokia also presented its outlook for increasing sales in its maps and patents businesses in 2015.
The CEO Suri took over the company in May 2014 after Microsoft Corp. acquired Nokias mobile-phone business in a $7.5-billion deal. He has also set a goal of striking more profitable contracts to the company amid the fierce competition of Huawei Technologies Co. and Ericsson AB.
As reported by the Financial Times, Tim Ihamuotila, the companys Chief Financial Officer, said: “As said before, recommencing an ordinary dividend is one of our main priorities, and we expect to continue to repurchase shares as part of our capital structure optimisation programme.”
Nokia lost 2.33% to trade at €6.49 per share as of 10:53 GMT, marking a one-year increase of 14.79%. The company is valued at €24.99 billion. According to the Financial Times, the 31 analysts offering 12-month price targets for Nokia have a median target of €6.40, with a high estimate of €8.50 and a low estimate of €4.70. The median estimate represents a -3.69% decrease from the last price of €6.65.
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