A new report from Credit Suisse Group AG (NYSE:CS), released today, suggests that though Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is making serious improvements right now, there may not be enough traction to guarantee the company’s future success.

The analysis suggests the Finnish firm will be unable to compete at the level other companies are at, and will ultimately fail in its ambitions.


Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) released its new line of Windows 8 Lumia phones last year, and though sales have been good, they haven’t been great. The firm will release its earnings report on January 24, but the they have already said that it expects to beat its own guidance. The Credit Suisse Group AG (NYSE:CS) report estimates that the company sold 4.5 million Lumia phones in the last three months of 2012.

Those numbers are good, but they are nowhere near the level of sales garnered by the big players in the market. Nokia is far behind, and the real question is whether or not they will be able to catch up in the next year, rather than simply survive quarter to quarter. The report estimates that Nokia will report earnings of 5 euro cents per share on January 24, on revenue of €8.15 billion.

Nokia is expected to make headway in cutting costs throughout 2013. Despite the cuts in costs, operating margins in the core Devices and Services segment are estimated in the report to be -1% for the fourth quarter. The segment is expected to have lost €170 million in the three months.

The real problem, according to the report, is that Nokia Corporation is simply not offering anything different enough to compete strongly; although it may continue to incrementally increase its market share, it will take too long to become a significant player. The firm’s 2013 estimates for Lumia sales are 22.5 million for 2013, implying a 2.5% market share.

The beginning of 2013 has been pretty good for the equities market and Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is no exception. Since the markets opened for the first time this year, the firm’s stock has risen by more than 11% to a $4.43 open this morning on the NYSE.

On its home Finnish stock market, Nokia stock has gained more than 13% this year, opening today at €3.42. Credit Suisse Group AG (NYSE:CS) puts a twelve month target of €2.50 on the firm’s stock. That amounts to a 37% loss in value, and a return of share prices to levels last seen in November.

It should be noted that according to FactSet, Credit Suisse is one of the more optimistic companies following Nokia Corporation. The Factset consensus estimate for the fourth quarter is a loss of 1 cent per share, compared with the CS 5 cent profit.

CS also maintains a Gross Margin estimate of 31% in the fourth quarter compared to the consensus figures of just under 29%. The analysts at Credit Suisse are, by comparison, bullish on Nokia, which translates into an underperform rating and an estimate loss in 37% of share value in the coming year.

Unless Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) unveils something completely unexpected in their earnings next week, the company may face a slow decline into oblivion. Some people are already questioning whether 2013 is the year the firm might finally leave the mobile industry.