Nokia Oyj (NYSE:NOK) Q4 2022 Earnings Call Transcript

Marco Wiren: Yes. Thank you. We €“ first of all, we believe that to be able to mitigate inflation, and there’s several different parts of that, cost productivity and cost €“ and on products improvements there. We are working continuously on those. And in this new operational model that we have, so it is very important that, as we said, that responsibility lies in different businesses as different businesses and their end markets are developing quite differently in different times that each business have to look into their end market development and what actions and measures they are taking to secure that they can continuously create value and perform in a better way.

Pekka Lundmark: Precisely, Marco, and then maybe to add one additional point is that, of course, when we talk about things like inflation €“ inflation, we have taken that into account in our guidance, when we estimated that this year’s margin would be between 11.5% and 14%. Of course, it includes all our inflation assumptions as we see them.

David Mulholland: Thank you, Frank. We’ll take the next question from Simon Leopold from Raymond James. Simon, please go ahead.

Simon Leopold: Thanks for taking the question. Just first, I wanted to get a quick clarification on your outlook for technology, given the one-off elements in the fourth quarter. I think when you talk about stable, should we be assuming that full-year technology revenue in 2023 is similar to full-year revenue in 2022? And let me just pivot to the question because that’s easing it up. There have been some indications that the U.S. operators have been absorbing some inventory of network equipment, and I think that was pretty evident in the fourth quarter. I want to get a sense of what’s your view of this situation, particularly the duration of any kind of potential pause in their purchases as they burn down inventory and what products might be affected by that in your business? Thank you.

Marco Wiren: Yes, I can start with the technology part. And in our guidance, as we said, that’s largely stable, of course, there might be small variations, as I said, also in the longer-term as we guide larger stabling technologies. But this is our guidance what we see today. And in our guidance as well for the full-year for the whole company, we have assumed that we will also settle those two outstanding litigations that we have right now.

Pekka Lundmark: Then when it comes to the U.S. market and the inventory question, we, of course, saw a couple of years of heavy investment in North America. So after this, yes, it is natural to expect some level of digestion in 2023. And it could also include some inventory digestion. But this is actually also built in our assumptions for 2023 when we said that the first half of the year would potentially be weaker in Mobile Networks than the second half. It’s also important to consider that our relative position in the region in North America with the major service providers is not only with major service providers, we have larger base there. We are working with Tier 2 and Tier 3 operators. We are working with enterprise customers, and we have the large network infrastructure business, which in this situation may be a bit less vulnerable.