What happened

Shares of onetime cellphone giant now turned telecommunications infrastructure company Nokia (NOK -1.12%) plunged after it reported an earnings miss this morning. Analysts had forecast Nokia would earn "comparable" operating profits of 690.6 million euros ($676 million) in its fiscal third-quarter report, but Nokia reported a comparable operating profit of only 658 million euros.    

As of 12:35 p.m. ET, Nokia stock is down 7.8%.

So what

Q3 sales surged 16% year over year to 6.2 billion euros, but Nokia owed most of its gains to a strong U.S. dollar that benefited Nokia's euro-denominated numbers. Absent the currency exchange rate effect, sales would have risen only 6%.

Gross profit margins on sales fell 60 basis points to 40.1%, and operating profit margins were down 100 basis points at 8.3%. That muted the revenue gains' effect upon operating profits, which only inched up 3% year over year to 518 million euros on an as-reported basis. That still worked out to a 33% increase in per-share net earnings (0.08 euros per share) or a 25% increase in pro forma net profits (0.10 euros per share).

Free cash flow lagged reported earnings at a relatively weak 300 million euros.

Now what

And that wasn't even the really bad news.

Guiding investors on what to expect through the remainder of this year, Nokia said its fiscal 2022 revenue will probably range from only 23.9 billion to 25.1 billion euros, consistent with prior guidance but probably short of U.S. analyst predictions for $25.4 billion. Now, the good news is that Nokia is promising improved operating profit margins of between 11% and 13.5% for the year. The other bad news, though, is that it looks like Nokia's sales, to which those profit margins are applied, will be down year over year -- and down even more than Wall Street was anticipating.  

Although it isn't a particularly pricey stock at a P/E ratio of only 16.5, and the company pays a modest 0.9% dividend yield as well, if Nokia isn't growing sales, it seems investors won't be interested in owning Nokia.