What happened

Shares of Nokia (NYSE:NOK) fell 15.1% in 2017, according to data from S&P Global Market Intelligence. The decline rested entirely on a single day in October, when the Finnish network equipment and services giant reported solid earnings with a side of gloomy guidance.

So what

Nokia's third-quarter report, which was published on Oct. 26, was a mixed bag. Adjusted earnings more than doubled year over year to $0.11 per share and exceeded Wall Street's $0.07 target, but top-line sales fell 7% and missed the consensus estimates.

Management comments pointed to a rough few quarters ahead in the global market.

"We experienced some challenges in our Mobile Networks business and see a continued decline in our primary addressable market in 2018," said Nokia CEO Rajeev Suri in a prepared statement. "That decline, which we estimate to be in the range of 2% to 5%, is the result of the multiple technology transitions under way; robust competition in China; and near-term headwinds from potential operator consolidation in a handful of countries."

Investors ignored the strong bottom-line performance in the third quarter and focused on the coming quarters' soft wireless equipment sales. Share prices fell 19% that day and still haven't recovered.

The Nokia logo overlaid on an overhead shot of a city street.

Image source: Nokia.

Now what

In my view, the October plunge was an overreaction to temporary issues for the whole network equipment sector. Nokia is not the only stock that took an unfair haircut last fall, but the company certainly has the balance sheet to make it through some short-term softness. The stock is trading at a modest 15 times forward earnings today.

That being said, a market slump lasting halfway into 2018 would give us plenty of time to dive deeper into Nokia's business prospects and make informed decisions about investing in this stock -- or stepping back from it. If there's a big rebound coming, it's not happening until the somber story actually turns brighter again.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.