Nokia shares fell sharply on Thursday despite third-quarter results that exceeded profit forecasts, as investors focused on weaker free-cash-flow guidance and higher restructuring costs. Nokia closed 9.72% lower at €7.43 in Helsinki, while its NYSE-listed shares traded down 14.76% at $7.89 in U.S. trading.
Reported net sales rose 10% year over year to €5.154 billion, slightly above the consensus estimate of about €5.05 billion. Comparable operating profit climbed 35% to €605 million, well above the approximately €453 million analyst forecast cited by Reuters. Comparable operating margin improved to 11.7% from 9.5% a year earlier, and comparable diluted EPS from continuing operations rose to €0.09 from €0.06.
However, reported operating profit fell 22% to €196 million, and reported diluted EPS was €0.03. The gap was driven partly by €357 million in restructuring and integration charges during the quarter. Nokia also cut its 2026 free-cash-flow conversion forecast from 55%–75% of comparable operating profit to 35%–55%, citing an additional €400 million working-capital investment to secure component supply and support 2027 growth, plus accelerated restructuring.
Annual restructuring charge assumptions increased from €800 million to €1.1 billion, with associated cash outflows now seen at €800 million–€900 million. Third-quarter free cash flow was approximately negative €99 million, and net cash and interest-bearing financial investments fell 14% year over year to €2.584 billion.
Demand signals remained strong: sales to AI and cloud customers rose 123% year over year, order intake rose 118%, and Nokia secured approximately €1.5 billion in new AI and cloud orders during the quarter. Network Infrastructure revenue grew 17% to €2.158 billion, including 43% growth in IP Networks and 18% growth in Optical Networks. CEO Justin Hotard expects combined Optical and IP Networks revenue to grow 25%–30% in 2027, and the Infinera integration is now expected to be completed by the end of 2026, one year ahead of schedule, with €200 million in net synergies.
Nokia maintained its 2026 comparable operating profit guidance of €2.1 billion–€2.6 billion, with management expecting a result above the midpoint, implying a sharp fourth-quarter earnings increase. The company expects Q4 net sales to rise 20%–24% sequentially. Investors will evaluate whether the strong AI-driven demand can translate into durable cash returns after the costs of working capital and restructuring are absorbed.
