Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) will have to show some major progress in its infrastructure business this time around to keep investors interested. Analysts at Societe Generale don’t believe this will be too much of a problem, although they are particularly interested in seeing just how aggressive Nokia has been in its contract bidding.

Nokia X

Growth expected in Nokia Solutions and Networks

In a report dated April 17, 2014, analysts Andy Perkins and Peter Knox say they believe the infrastructure market will be fairly strong this year. They do note that NSN was weak last year, showing turnover which declined 18% as the broad market grew by 5%. However, they also point out that Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) exited “struggling countries and contracts” and that the company had to deal with downturns in its GSM and core businesses.

They say that in December, operator capital expenditure on wireless equipment was only 2%, but they expect that to rise by 7% this year, with most of that growth coming in China and Western Europe. Together, those two markets make up 25% of NSN’s business, which means good things for Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V).

They also think NSN will see its business in the U.S. grow as well. The company’s U.S. revenues increased from 7% of its total revenue to 13% in nine months during 2013. The Societe Generale team believes this will keep growing as Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) benefits from the Spark contract with Sprint Corporation (NYSE:S).

Expectations for Nokia’s earnings

However, they think any benefit from Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s contract with Sprint Corporation (NYSE:S) will probably be loaded into the back end of the year and thus won’t make a major impact on the company’s first quarter results.

For the first quarter, they’re estimating that NSN’s revenues were €2.8 billion, which would be a 1% year over year decline. For the full year, they continue to expect NSN to post 2% growth in revenue. For the first quarter, they’re estimating a 5.2% operating margin, which is in line with guidance of 5% plus or minus 4 percentage points. The analysts say if Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) was particularly aggressive in bidding for new contracts, the company could put an end to declining revenues, but at the expense of margins.

They continue to rate Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) as a Buy with a €5.80 per share price target. Their valuation of the company is a sum of the parts which values NSN at €1.9 a share, HERE at €.7, cash at €1.7, patents at €1, and tax losses at €.5 a share. It is widely expected that Nokia will again include its handset division under discontinued operations as it waits for the final approvals for the deal with Microsoft Corporation (NASDAQ:MSFT) to close. One of the big things that’s holding up the deal is Nokia’s tax problems in India, which are currently preventing the company from signing over its facility there to Microsoft.