Home Technology Nokia Corporation (ADR) (NYSE:NOK): Cash Flow Is Key

Nokia Corporation (ADR) (NYSE:NOK): Cash Flow Is Key

Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V), on 10th of January, preannounced its fourth quarter results with a D&S EBIT margin of 0-2 percent ( +/- 4ppts), against analysts’ consensus of 1.3 percent. The handset maker announced an EBIT margin 13 percent to 15 percent (+/- 4ppts) against the consensus of 13.9 percent. A report from BoAML, speculates that the results include one-offs of €50m in D&S (relating to the RIM patent settlement), boosting margins by 1.3 percent, and €30m in NSN, boosting margins by 0.8 percent.

The Finnish company will come up with its fourth quarter results on January 24th, the report is expected to focus on Nokia’s cash flow during the quarter. Analysts expect cash flow from operating activities to vary from -€1,121m to €1,980m, with an average of €-36m (BofAML -€584m).  The report says “investors will also want to understand how much of the 4Q12 margin upside came from gross margins (consensus 30.3%, BoAML 33.5%) vs opex savings.”

The general consensus on the first quarter of 2013 EBIT margins are about 1 percentage ahead of the midpoint of management guidance for each of Nokia’s three divisions: D&S, L&C and NSN. BoAML’s expectation for 2013 group EBIT margin is 1.3 percentages below consensus, mainly due to its less optimistic view of D&S (BoAML -1.9%, cons 1.5%).

Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) shares soared in pre-market trades after the company released its better-than-expected pre-earnings report. The company has been counting on its new Windows 8 Lumia handsets to turn sales around, and if the pre-earnings report is any indication, the company has done it.

According to a recent Reuters poll of 14 analysts, 11 of them believe Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) will not pay any dividend for 2012; this compares to the previous year’s 20 euro cents payment, this will be a first for the company in more than two decades. The company has paid an annual dividend since 1989, and this latest poll comes as Nokia is gearing to announce its fourth-quarter earnings report before the opening bell on Thursday, January 24.