Last week, Nokia released their annual report to shareholders, and their 2018 20-F report to the US Securities and Exchange Commission. Not usually very exciting stuff. But in the 20-F report, Nokia stated:
During the course of the ongoing integration process, we have been made aware of certain practices relating to compliance issues at the former Alcatel Lucent business that have raised concerns. We have initiated an internal investigation and voluntarily reported the matter to the relevant regulatory authorities, with whom we are cooperating with a view to resolving the matter. The resolution of this matter could result in potential criminal or civil penalties, including the possibility of monetary fines, which could have a material adverse effect on our business, brand, reputation or financial position.
What does that really mean? What sort of criminal penalties? How big could the monetary fines be? What is really going on here?
Well, Nokia stock plunged 8% on Friday, before Nokia issued a clarifying statement:
While Nokia does not typically comment on market rumors, given the market reaction and inquiries related to a disclosure in the risk factors section of its annual report on Form 20-F for 2018, the company issues this statement to clarify that the specified investigation is not expected to have a material impact on Nokia. We have seen no evidence that would suggest that criminal penalties would apply in this case, and we believe it is highly likely that any penalties that might apply would be limited and immaterial.
That was not too much clarification. Nokia shares still closed down 6%. Not really a good day for investors. Probably scared a lot of employees and even customers too.
We have to wait to see how this story unfolds.
Information on Nokia’s 20-F is available at https://www.nokia.com/about-us/news/releases/2019/03/21/nokia-has-filed-its-annual-form-20-f-for-2018-with-the-us-securities-and-exchange-commission-and-published-its-nokia-in-2018-annual-report/
To see the Nokia’s commentary “rumours” surrounding their 20-F, see https://www.nokia.com/about-us/news/releases/2019/03/22/nokia-comments-on-market-rumors-related-to-its-annual-report-on-form-20-f/
TruePulse buys and sells surplus and decommissioned telecommunications equipment by Nokia, and from acquired Alcatel-Lucent, including the Lucent FT-2000, Lucent WaveStar OLS400G, Lucent CBX500 and the Lucent 5ESS.