Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s HERE Maps may not have been worth much, but investors appeared to be pretty surprised when the company took an impairment charge in connection with the segment. Bernstein analysts were actually surprised by investors’ surprise, however.

Nokia Corporation (NOK) Downgraded After HERE Maps Write-Off

They have downgraded Nokia to from Market Perform to Underperform and lowered their target price from €5.5 to €4.9 per share. Their U.S.-based share price target moves from $7.21 to $6.42 per share.

Nokia’s HERE Maps running out of options

In their report dated Nov. 4, 2014, analysts Pierre Ferragu, Jasmeet Chadha and Joe Del Gaudio said they haven’t thought Nokia’s maps division has had much value for some time. They note that it has been “stuck between” Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG)’s maps offerings, essentially leaving it in limbo.

The Bernstein team sees the impairment charge as “the natural movement of accountants keeping up with business reality at their own pace.” They add that they don’t trust these types of moves as any kind of “leading” indicator.

Nokia’s valuation to decline

However, they suggest that the HERE Maps impairment charge could be just the first event that will spur a decline in Nokia’s valuation in the next 12 months. They do call the recent profitability at Nokia Solutions and Network “impressively high” but believe that it’s peaking and that it is driving “overly optimistic expectations” for next year.

The Bernstein analysts say that bulls who focus on licensing revenue potential from Nokia’s intellectual property will not be all that thrilled with next week’s Capital Market Day. They also think that the result of the licensing negotiations with Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) will disappoint “a lot.”

Only so much Nokia can do

While Nokia has shown some signs of growth and recovery in its networking equipment segment, even getting some control over profitability, the Bernstein analysts think there’s only so much it can do. They note that Nokia still remains the third place player in the space and that wireless equipment is very commoditized and often comes with high research and development costs.

The analysts say that the “only right way to make money” in the space is through scale or a low research and development cost base. They do say, however, that NSN is now able to stabilize its high single digit margins, which are about 5% in equipment and 10% in services, while also growing its top line by between 4% and 6%.

They see very limited opportunities in both HERE maps and intellectual property. In the maps segment, Nokia has tough competitors, while in intellectual property, they say Nokia’s portfolio is similar to that of several other companies, including Ericsson, Alcatel Lucent and Motorola / Google.