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NOK Stock Alert: AT&T Sends Nokia Plunging to 3-Year Low


  • Nokia (NOK) lost a key 5G equipment contract with AT&T (T) to rival Ericsson (ERIC).
  • The $14 billion deal will run for five years.
  • Proprietary advantages are disappearing as cellular moves to the cloud.
NOK stock - NOK Stock Alert: AT&T Sends Nokia Plunging to 3-Year Low

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Nokia (NYSE:NOK) lost a key 5G equipment contract to rival Ericsson (NASDAQ:ERIC), sending NOK stock to a three-year low.

NOK was opened this morning at $2.96 per share, a market capitalization of under $17 billion. On the other hand, ERIC stock rose on the news, gaining 3% overnight to $5.41, a market cap of over $18 billion.

AT&T (NYSE:T) will now spend up to $14 billion over the next five years on Ericsson’s Open Radio Access Network (ORAN) equipment.

Open RAN Away

Nokia became a network equipment company after losing the cellphone market to Apple (NASDAQ:AAPL). It bought what was left of Lucent and Alcatel, top phone switch makers in the last century, and moved into wireless infrastructure. Nokia then sought to leverage its patents as much as possible while slowly moving toward open systems.

Nokia’s support of ORAN was meant to appear open but still allow the company to retain control over the aftermarket. Open RAN lets commodity servers into the distribution of cellular radio signals. Nokia’s strategy also included partnering with Chinese companies to control costs and ending its legal battle with Apple. Pekka Lundmark, a Finn known as a corporate diplomat, became Nokia’s CEO in 2020.

Ericsson, also a highly proprietary equipment company back in the day, eventually moved to Open RAN as well. Open RAN will let AT&T choose among several companies for antennas and other equipment. That may limit Ericsson’s gains going forward, but it gave Ericsson the main AT&T contract. Ericsson will make equipment under the contract at a plant in Lewisville, Texas.

Lundmark admitted the loss of AT&T will hurt, saying it represented 5-8% of revenue. He had already announced 14,000 job cuts in October.

NOK Stock: What Happens Next?

Nokia and Ericsson have been steadily losing control of the equipment market to more open systems for years. As radio networks move to the cloud, proprietary advantages like patents are being cut out of the equation.

As of this writing, Dana Blankenhorn had a LONG position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

Article printed from InvestorPlace Media, https://investorplace.com/2023/12/nok-stock-alert-att-sends-nokia-plunging-to-3-year-low/.

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