Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is at risk of disappointing in its next quarterly report, according to analysts at Morgan Stanley (NYSE:MS). In a report to investors today, they pointed out that the company has “surprised positively” during its fourth quarter four times within the last decade, including in the fourth quarter of 2012. They said the last three times this has happened, Nokia went on to disappoint during the first quarter of the following year.

Nokia

The analysts at Morgan Stanley (NYSE:MS) believe Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s first quarter disappointments in the past have largely been due to “an inventory overhang,” and they said they continue to be cautious on the company’s first quarter results for this year as a result.

They pointed out also that Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) was selling down its Windows 7 phones in the wake of the release of the Windows 8 phones toward the end of last year. They said this could have a couple of effects on the company’s first quarter results. They said sales of Windows 7 handsets could have “flattered volumes and margins” during the fourth quarter. As a result, the company could see a revenue drop during the first quarter that’s worse than seasonal.

The analysts believe that sales volumes of Nokia’s Lumia handsets will “continue to drive sentiment” about the company’s stock in the short term. They also believe gross margins will weigh heavily on the markets’ reactions to the company’s next report. They’re predicting 20 percent gross margins for Nokia’s smartphone business and 6 to 7 million Windows Phones sold during the first quarter.

They have set their price target at €2.60 per share and given the stock an Underweight rating.

Shares of Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) rose slightly in Wednesday afternoon trading at the New York Stock Exchange.