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Inside Nokia’s Revenue Aims for Fiscal 2017 and Beyond

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Revenue decline of 0.4% expected in fiscal 2017

Analysts expect Nokia’s (NOK) revenue to fall 3.8% YoY (year-over-year) in 3Q17 to $6.39 billion and to fall 0.7% YoY to $7.29 billion in 4Q17. For fiscal 2017, Nokia’s revenue is estimated to fall a marginal 0.4% to $26.02 billion.

However, analysts expect revenue growth of 3.1% YoY for Nokia in fiscal 2018. Its average EPS (earnings per share) estimate is $0.06 in fiscal 3Q17, which would be a rise of 20% YoY. In fiscal 2017, analysts expect Nokia’s EPS to rise 25% YoY to $0.30.

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Revenue growth difficult in a mature market

Network infrastructure firms Nokia and Ericsson (ERIC) are finding it difficult to improve their revenues on a YoY basis due to maturity in most markets. China’s (FXI) Huawei is the only firm that’s been able to achieve significant revenue growth by targeting emerging markets (EEM) where mobile operators are still enhancing network coverage.

In 2015, Huawei overtook Ericsson to become the largest telecom infrastructure company. While Ericsson’s revenue from its carrier segment rose 23% YoY to $42 billion in 2016, Nokia saw a decline in this segment. Huawei’s telecom revenue is further expected to rise 30% YoY this year.

Analysts will be closely watching to see if Nokia’s smartphone licensing agreement will be a success and if it can positively impact revenues over the next few quarters.

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