What happened

Shares of Nokia (NYSE:NOK) fell 27.9% in October 2019, according to data from S&P Global Market Intelligence. The inveterate maker of telecom-grade networking equipment and provider of related services posted an in-line third-quarter report with disappointing guidance targets, and that's all she wrote.

So what

The Finnish company saw revenue rise 4% year over year, measured in local currencies, to $6.31 billion. Adjusted earnings decreased from $0.06 to $0.05 per American depositary receipt. These results were roughly in line with Wall Street's consensus estimates, but Nokia also slashed its full-year earnings guidance by 22% due to rising costs of keeping the company's 5G solutions competitive.

A blue Nokia logo on the lawn outside the company's headquarters in Espoo, Finland.

Image source: Nokia.

Now what

Nokia also paused its dividend policy until further notice, redirecting those funds into even further 5G investments. You might think that all of this 5G activity should make Nokia an unbeatable behemoth in that specific market, but the company is also losing 5G contract opportunities with major network operators such as Telecom Italia.

Wall Street didn't view this sudden drop as a wide-open buying window, issuing several downgrades and critical reports based on the third-quarter report. Analyst firm Credit Suisse worries that Nokia may lose 5G market share due to product delays and high costs. J.P. Morgan slashed its price target on Nokia by 44% and removed the stock from the firm's list of top recommendations.

It's not surprising to see Nokia's stock take a beating under these challenging circumstances. The dividend cut alone is a deal breaker for many investors, after all.