Nokia Faces Headwinds Revenue Disappoints as U.S. Tariffs and Competition from Ericsson Take Toll

Finnish technology leader Nokia $NOKIA.HE recently released its latest quarterly earnings, which fell short of market expectations and highlighted several new challenges for the company. The comparable operating profit for Q1 2025 dropped to EUR 156 million (USD 176.9 million), significantly below the EUR 243.83 million forecasted by LSEG analysts—a decline of over 36%. This result underscores the impact of both internal and external pressures on Nokia's financial performance.

Tariff Impact and One-off Expenses: Short-Term Obstacles

A key factor in Nokia's declining profit was a one-time charge of EUR 120 million within its mobile networks division. In addition, the company highlighted the negative effect of U.S. tariffs, which are expected to further weigh on second-quarter profit by an estimated EUR 20–30 million.

Five Forces Shaping Nokia’s Market Position

1. Drop in operating profit compared to analyst expectations  

2. Effect of U.S. tariff policy on revenues  

3. Significant one-off costs within mobile networks  

4. Competitive pressure from Ericsson $EKSN 

5. Stock market volatility following earnings reports

Competition and Regional Growth in Focus

Despite heightened competition from Scandinavian rival Ericsson, Nokia continues to record steady sales growth in North America. This return to positive momentum suggests a broader recovery in the telecom equipment sector after years of downturn.

Industry Shifts and Future Risks

- Sustained recovery in Nokia’s North American sales  

- Temporary headwinds from tariff politics  

- Impact of internal cost pressures on profit margins  

- Intensified global competition among leading telecom equipment makers  

- Growing importance of digital transformation and next-generation network upgrades

Outlook and Industry Challenges

Nokia's recent financial results highlight the necessity for quick adaptation to changing market dynamics. While tariff issues present immediate profitability concerns, the rebound in demand within key regions will challenge the resilience of the company’s global strategy. As competition heats up, the effects of internal optimization and portfolio modernization efforts are likely to become evident only in the long term.