Nokia warned there could be short-term disruption caused by the global tariff situation as the company reported a mixed first quarter of the year.

It was the first earnings report since the company’s new CEO Justin Hotard took the helm at the beginning of the month.

The Finnish vendor reported a slight decline in net sales for the first quarter of €4.39 billion ($4.99bn), down one percent YoY.

Nokia made note of its acquisition of Infinera, which completed during the first quarter, as it seeks to increase its scale in Optical Networks and with hyperscalers.

The vendor said that its Network Infrastructure division grew 11 percent on a constant currency and portfolio basis, while Cloud and Network Services grew by eight percent.

Mobile Networks grew by two percent, with the vendor striking a key 5G RAN deal with T-Mobile in the US this week.

However, Nokia reported that its Q1 operating profits fell by 74 percent year-on-year (YoY) to €156 million ($177m), from €600m ($681m) in Q1 2024.

Hotard warned that the tariff disruption looks set to continue, but is hopeful the situation won’t hit the company for the whole of the year.

“Looking forward, we are not immune to the rapidly evolving global trade landscape; however, based on early customer feedback, I believe our markets should prove to be relatively resilient.”

He said that Nokia expects to see strong net sales growth in Network Infrastructure plus Cloud and Network Services this year, while net sales for Mobile Networks should be “largely stable.”

“Regarding the tariff situation, there could be some short-term disruption,” added Hotard.

“We will continue to utilize the flexibility of our global manufacturing network to minimize impact of the evolving tariff landscape. Based on what we see today, we currently expect a €20 to €30 million ($22.8m-$34.1m) impact to our comparable operating profit in the second quarter from the current tariffs.”

Infinera acquisition opens up data center opportunities

Nokia has looked to capitalize on the recent data center boom, even prior to the appointment of Hotard, formerly Intel’s data center lead.

In October, former CEO Pekka Lundmark said Nokia sees a “significant opportunity” to expand its presence in the data center market.

Last year, Nokia extended its existing agreement to supply Microsoft Azure with data center routers and switches. Then, in December, Nokia and Kyndryl announced plans to offer advanced data center networking solutions and services to global enterprises.

Speaking on an earnings call this week, Hotard said the Infinera acquisition will only strengthen the vendor’s data center push.

“This acquisition [Infinera] brings a number of significant benefits,” Hotard told analysts.

“It gives us the scale to accelerate our product roadmaps and to drive more innovation. It also increases our access to hyperscale customers, which are a key growth driver in both cloud and AI data center investments.”

He also outlined the US as a “high growth geography” for the company, which has missed out on key network 5G RAN deals to US carriers Verizon and AT&T in the past.

“And the way I think about the market in AI, particularly with optical is, if you look at the build out of data center, what’s happening with AI is it’s driving, as we all know, significant new data center build, but it’s also driving new connectivity demands between data centers, both whether it’s for training or inference or some of the convergence we’re seeing with AI reasoning models,” Hotard added.