Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) will be coming up with its quarterly earnings later this week. A report from Liberum Capital expects the handset maker to atleast meet the guidance if not exceeding it.
The launch of new Lumia phones like 920T and Lumia 620 has helped the company to strengthen its Lumia sales. The dwindling margins for the Finnish company have held up owing to stable pricing for the Lumia 920. The outlook for the second quarter of 2013 also looks positive more so because of rumored launch of Lumia 928 at Verizon Communications Inc.(NYSE:VZ). Users are also gradually accepting and look satisfied with WP8 and the Lumia range, and the report expects the “adoption to gradually expand.”
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What to Expect
Liberum Capital expects sales of €3.56 billion in the Devices & Services division which is a decline of 8 percent on quarterly basis. Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is expected to ship 6.1 million smartphones in the quarter compared to 6.6 million shipped in the fourth quarter of 2012. Among this, Lumia shipments are expected to be of 5.5 million units, up from 4.4 million units in the last quarter.
Overall, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s sales are expected to come at €7 billion, down 12.1 percent quarterly and 3.8 percent year over year. Gross margin for the smartphone maker is forecasted at 27.3 percent and non-IFRS EPS at €-0.05. NSN sales for the company are estimated to come at €3.27 billion, down 18 percent quarter over quarter and 11 percent on a yearly basis. Non-IFRS operating margin at NSN are expected to come down to 2.8 percent on account of lower sales.
Nokia Lumia – A Game Changer
Feedback from the retailers in China suggests a healthy demand for Lumia 920T and the Lumia 920 during the quarter. In other markets also, demand for Lumia 920 has been stable and that will help boost the margins. Lumia 620, which was launched to cater mid to low end smartphone users, was launched at the start of the quarter and is believed to get a good response in multiple markets in Asia, including China.
Despite numerous issues still facing the Finnish company, there is evidence of the growing popularity for both the Windows Phone 8 operating system and the recent generation of Lumia devices, says the report. The growing popularity will help the company to register strong sales through repeat purchases and word of mouth recommendations.
Strategy wise also, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is very much in the game with “a steady product renewal road map while continuing to innovate where possible.” The report expects the strategy to pay off with a gradual increase in Lumia volumes and market share. For Nokia Asha range, the report expects the devices to defend or build share, at least in the medium term.