Shares of Nokia plunged nearly 9% to $8.44 on October 22, after the Finnish telecom equipment maker paired a strong quarter of earnings with a jarring downgrade to its cash outlook — forcing investors to weigh whether rising profits actually translate into money they can pocket. Nokia Beat Every Estimate This Quarter — So Why Did Investors Dump the Stock?
Shares of Nokia cratered 8.8% to $8.44 on October 22 after the company delivered a quarter that, on paper, looked like a clear win — beating earnings estimates by over 40% and revenue forecasts by nearly 2%. Adjusted earnings per share came in at $0.102 versus a forecast of $0.07, and revenue hit $5.83 billion versus the $5.73 billion expected. But investors didn't celebrate. They zeroed in on a deteriorating cash picture that raises uncomfortable questions about whether Nokia's spending spree will pay off.
• Profits Surged, but Actual Cash Went the Wrong Way. Comparable operating profit rose 35% to €605 million, driven in part by AI and cloud sales that grew 123%. Yet free cash flow was negative €99 million in Q3. The gap between accounting profits and cash in hand is what spooked shareholders: strong earnings mean little if the money isn't flowing into the bank. Cash outflows related to net working capital in the quarter were roughly €560 million — money tied up in inventory and receivables rather than returned to investors.
• The Cash Outlook Got Slashed — Twice in Six Months. Just last quarter, Nokia guided investors "towards the low end" of a 55%–75% free-cash-flow conversion range. Now it has cut that target to 35%–55%, meaning potentially half or less of its operating profit will convert into actual cash this year. Nokia is planning to invest an additional €400 million in working capital to secure components for 2027 growth. That's a bet on the future at the expense of today's shareholders.
• Restructuring Bills Keep Climbing. Nokia now expects restructuring and associated charges of €1.1 billion for 2026, up from the €800 million it projected earlier.
Related cash outflows are expected to reach €800 million to €900 million.
Reported operating profit, which includes these costs, actually fell 22% to €196 million, and reported operating margin shrank to 3.8% from 5.4%. The adjusted numbers look great; the reported ones show how expensive Nokia's transformation really is.
• AI Orders Are Booming — But Can They Justify the Pain? AI and cloud net sales reached €631 million — up from €279 million a year earlier — and the company secured €1.5 billion in new orders from those customers.
Management kept full-year operating profit guidance intact and expects to finish above the midpoint. The strategic bet is clear: spend now to ride the data-center infrastructure wave. The risk is equally clear — if that demand slows, Nokia will have burned cash and goodwill with nothing to show for it.