Nokia Looks Good But Future Uncertain

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Nokia Corporation (NYSE:NOK) released its earnings report for the three months through September on Wednesday morning. The company performed well during the period. Its handset business recorded record sales in the quarter and performance at Nokia Siemens Networks impressed investors. There are reasons to be wary after the recent rise in price, however.

Nokia Looks Good But Future Uncertain

A new report from Raymond James analysts Tavis C. McCourt and Daniel Toomey puts a price target of $7 on shares in Nokia Corporation (NYSE:NOK) and rates the company at Market Perform. They were impressed by the results from the company, but shares are now trading at above $7.50, which prices in a good deal of growth.

Nokia earnings

Most of the positives from the Nokia Corporation (NYSE:NOK) earnings report came from the firm’s Nokia Siemens Networks segment. That business is likely to form the core of Nokia after the Microsoft Corporation (NASDAQ:MSFT) acquisition of Nokia’s mobile device business goes through. NSN showed better than expected margins in the quarter.

The Raymond James report says that Nokia Siemens Networks has been “superbly managed” in 2013. The business builds infrastructure used in wireless communications. Margins for 2013 are expected to come in at around 10%, but the analysts reckon investment pressures will push that number down to around 8% next year.

There are positives for Nokia Corporation (NYSE:NOK) outside of the infrastructure business. At the close of the company’s mobile device business sale to Microsoft Corporation (NASDAQ:MSFT), the analysts expect Nokia to have around $2.42 per share in cash. Nokia is doing well, but today’s valuation is a little strong for Raymond James.

Nokia risks

There are a lot of risks for Nokia Corporation (NYSE:NOK) heading into the new year. One of the biggest risks faced by the company is competition. Despite the company’s cash reserves, it is still fairly delicate looking next to some of the other companies in the business. That means the firm will need to be managed very well in order to continue operating competitively.

The rise in the value of Nokia Corporation (NYSE:NOK) since the release of this earnings report brings the company’s full year share growth to more than 90%. Investors are impressed with the way Nokia has been performing since it agreed to get rid of its mobile business, but a lot of growth is expected in a relatively short period of time.

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