Nokia Corporation (ADR) (NYSE:NOK) is scheduled to report its first quarter results on April 18th, 2013. Analyts at Credit Suisse expect group sales of  €6.24bn (-22% qoq/-15% yoy) and EPS of €(0.04) vs. consensus at €6.50bn and €(0.04) respectively. According to firm, Nokia Corporation (NYSE:NOK) continues to see limited traction for Windows Phone devices, which combined with increasing risks to its profitable Mobile Phone business from Samsung.


Analysts expect Nokia Corporation (NYSE:NOK) to sell 72.9mn phones in Q1, which includes 4.9mn smartphones (4.7mn Lumia/0.2mn Symbian vs. 4.4mn/2.2mn in Q412) and 68mn mobile phone units, driving D&S revenue of €3.03bn (-21% qoq/-29% yoy). With GMs of 24.3% and opex of €800mn (vs. €870mn in Q412), analysts are looking for a loss of €67mn (OM loss of 2.2% in-line with consensus). With Nokia Corporation (NYSE:NOK) continuing to see limited smartphone traction in spite of product refresh at MWC (Lumia 720/520), and increasing threat from Samsung’s REX feature phones aimed at Nokia’s Asha touch phones, analsysts at the firm believe D&S losses will persist for 2013/2014.

For NSN, analysts expect sales of €3.07bn with OMs of 4.5% (€138mn profit) which are roughly in-line with consensus. While strength in Japan/Korea markets (analysts estimate these regions accounted for ~20% of sales in 2012 vs. ~15% in 2011) and benefits of cost cutting should provide margin strength in 2013, long term sustainability of close to double-digit OMs remains questionable with declining investments (analysts assume OMs of 8%/7% in 2013/2014).

Nokia’s Cash Flow Problems

With group EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) of c€200mn in Q1, but more than offset by cash restructuring (€350mn), capex, interest, taxes and declining payments from Microsoft, analysts believe that cash burn may be some €400–500mn in Q1. Although the group has net cash of €4.4bn, analysts at the firm believe this to decline from €3.1bn (excl. NSN) in 2012 to €1.6bn by 2014, which remains a concern for CS.

CS maintain their UP rating for Nokia Corporation (NYSE:NOK).