Nokia's (NYSE:NOK) stock took a hit today, dropping nearly 7% after releasing its Q3 2024 earnings. The company's net sales fell by 7% year-over-year in constant currency, primarily driven by a sharp decline in Mobile Networks, especially in India, following last year's heavy 5G deployments. Despite this, Nokia pulled off a solid gross margin improvement to 45.7%, thanks to a better product and regional mix and tighter cost control. Network Infrastructure and Nokia Technologies showed resilience, with growth in Fixed Networks and the stability of their patent licensing deals helping balance out the negatives.

• Warning! GuruFocus has detected 6 Warning Sign with NOK.

On the profit front, Nokia managed to increase its reported operating profit by 4%, with comparable profit up 9% year-over-year. This is no small feat given the tough market conditions. Strong cost-saving efforts, like the reversal of loss allowances, played a big role in cushioning the impact of lower sales. Mobile Networks and Cloud and Network Services have been slow to recover, but Nokia is banking on a significant pickup in growth in Q4, especially in Network Infrastructure, where the company sees a strong demand pipeline.

Strategically, Nokia isn't just sitting back. The company is pushing into new areas like data centers and private wireless networks. Plus, their pending acquisition of Infinera is set to strengthen their Optical Networks division, opening up fresh opportunities. Despite slower sales recovery, Nokia is sticking to its full-year outlook with a projected comparable operating profit between EUR 2.3 billion and EUR 2.9 billion and solid cash flow. They're clearly setting up for a strong finish to 2024, even with today's market dip.

This article first appeared on GuruFocus.