What happened

Oof! That hurts. Nokia (NOK -2.43%) reported its third-quarter 2020 earnings Thursday, and in late morning trading the stock is getting clobbered -- down 19.5% as of 11:30 a.m. EDT.

Heading into earnings, analysts had forecast that Nokia would book a small $0.07 per share profit on sales of about $6.3 billion. In fact, Nokia earned a bit less than $0.05 (four euro cents), and its sales were less than $6.2 billion, thus "missing" on both the top and bottom lines.    

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Image source: Getty Images.

So what

Year over year, Nokia's sales declined 7%, with revenue declining 7% in the company's flagship networks division, falling 8% in Nokia technologies, and 14% in Nokia software. The news wasn't all bad, though.

Operating profit margins on the lower revenue at least climbed, rising 200 basis points to 6.6%. On the bottom line, Nokia may have "missed earnings," but its profits quadrupled from the single euro cent it had earned a year ago.

Now what

Updating its financial guidance through the end of the year, Nokia now projects that it will end fiscal 2020 with profits of somewhere between 20 and 26 euro cents ($0.23 to $0.30). The bad news is that this latest guidance is about 10% below what Nokia had previously forecast. The good news is that, with Street forecasts circling $0.27 in profit for the year, it's about what Wall Street was already looking for.

Given the small size of the miss in the third quarter, and the potential for Nokia to still at least meet guidance in the fourth quarter, I'm honestly not sure why investors are getting so inordinately upset with Nokia stock today. At a valuation of just 21 times earnings, with strong free cash flow and a cash-rich balance sheet, Nokia stock really doesn't deserve to be beaten up as badly as it is right now.