The fact is that not all oligopolies translate into a windfall for their members, as we wrote earlier this year in Nokia: No more surprises after another profit warning.
A perpetual "value trap"—those companies that are structurally undervalued because their profitability is not improving—Nokia nonetheless presented an intriguing profile in some respects since, as with Ericsson, the value of its patent portfolio undoubtedly covered at least half of its enterprise value.
Of course, Nvidia's investment is only a token gesture for the world's largest market capitalization – and a drop in the ocean when compared, for example, to the promise to invest $100bn in OpenAI.
However, it does give some weight to Nokia's umpteenth strategic plan for reinvention, which now aims to integrate artificial intelligence into its technologies, particularly wireless networks.
Still struggling to grow, Nokia had its second-best fiscal year in 15 years in 2024, with a cash profit—or free cash flow—of €2bn, which enabled it to carry out a substantial share buyback, increase its dividend, and improve its balance sheet.
The Finnish group also acquired Infinera, an American specialist in optical networks, with the particular aim of capturing market share in the highly dynamic data center sector. However, the first step will be to turn around the situation of the American company, which is poorly capitalized and has recently faced a worrying decline in sales.
Nokia published its nine-month financial results yesterday. At this stage, it is clear that the 2025 financial year will be less successful than 2024, with free cash flow expected to be below €1.5bn over twelve months—identical to the average of the last five years, which, hopefully, will not be an insurmountable horizon forever.
The cloud and artificial intelligence are promising opportunities, of course, but Nokia is no stranger to broken promises. Since being knocked off its pedestal in mobile telephony by Apple and Samsung, the Finnish company has made numerous attempts at reinvention, without ever managing to convert the try.
A famous Anglo-Saxon stock market aphorism states that "The four most expensive words in the English language are: This time it's different." Halo effect linked to commitment However, with Nvidia's stock market valuation now back to its 10-year high, investors are betting that this time will be different...
