Nokia Stock Drops After Restructuring Plan And Fresh Profit Targets

Nokia Oyj (NYSE:NOK) is reshaping its long-term strategy to align with the rapid shift toward AI-driven networks and next-generation connectivity. The company stated that the move is necessary as traditional 5G growth cools and customers demand more intelligent, software-centric infrastructure.

Nokia's stock is lower as investors react to slowing 5G demand, ambitious long-term targets, and execution risks tied to its restructuring of the business into new operating segments.

New Operating Structure and Ambitions
Starting January 1, 2026, Nokia will reorganize into two core divisions: Network Infrastructure and Mobile Infrastructure. Leadership expects the simplified structure to speed execution and sharpen investment focus. Alongside the change, Nokia set a comparable operating profit target for 2028 of €2.7 billion to €3.2 billion.

Why the Reset?
Nokia argues that slower 5G spending and rising demand for AI-native networks require a leaner model. The company also aims to strengthen its position as a secure Western supplier amid evolving geopolitical dynamics.

Also Read: Nokia Secures Multi-Year Pact To Power Telecom Italia’s 5G Expansion

Updated Financial Targets and KPIs
Nokia's updated financial targets and KPIs outline several core benchmarks designed to strengthen profitability and sharpen execution. The company aims for Network Infrastructure sales to grow 6–8% annually between 2025 and 2028, with Optical and IP Networks expected to expand at a 10–12% rate.

By 2028, Nokia is targeting a Network Infrastructure operating margin of 13–17% and a Mobile Infrastructure gross margin of 48–50%. It also plans to reduce centralized operating expenses to €150 million from roughly €350 million and convert 65–75% of comparable operating profit into free cash flow.

Together, these targets replace earlier guidance and reflect a stronger emphasis on returns, operational discipline, and long-term financial resilience.

Strategic Priorities
Nokia's five focus areas include expanding AI and cloud capabilities, leading AI-native and future 6G network development, deepening customer partnerships, tightening capital allocation, and delivering sustainable returns.

Supporting actions include grouping slower-growth units into a new Portfolio Businesses division and launching a defense incubation unit to pursue secure-connectivity opportunities.

Price Action: NOK shares are trading 6.17% lower at $6.23 premarket at the last check on Wednesday.

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