New Nokia Corporation (ADR) (NOK) Set To Outperform [REPORT]

Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is scheduled to report its fourth quarter and full year earnings on Thursday, January 23. Results will be reported in a new format with three business units, NSN, HERE and Advanced Technologies (intellectual property). The device & services business, which has been sold to Microsoft Corporation (NASDAQ:MSFT), will fall under “discontinued operations. Nokia will also be providing historical results before the scheduled results for comparability purposes.

Nokia to incur some losses in devices & services segment

Credit Suisse analyst Kulbinder Garcha said in a research note that all eyes will be on the performance on NSN. Garcha estimates NSN sales to rise 16% QoQ to €3.01 billion in the fourth quarter, with operating margins of 12.7%. Normal sales seasonality and the ongoing cost cutting should help NSN margins. Meanwhile, Wall Street consensus calls for €3.15 billion in sales with 12.2% operating margins. Credit Suisse says that recent wins at China Mobile Ltd. and Sprint Corporation (NYSE:S) should help Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s NSN unit see strong top-line growth in 2014. For the full-year 2014, Garcha expects NSN’s revenue to come at €11.5 billion, indicating a 3% YoY growth. But its profit margins are likely to decline from 10% in 2013 to 8.5% in 2014.

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As far as total group sales of Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) are concerned, JPMorgan analyst Sandeep Deshpande estimates the Finnish company’s group sales to reach €3.288 billion, with group EPS of €0.06. Nokia is expected to post €47 million in losses from the device & services segment. Deshpande estimates NSN sales at €2.98 billion with 12% operating margin. The Advanced Technology segment sales are expected to top €126 million with EBIT of €98 million. That indicates a 78% profit margin. The HERE maps division  sales are expected to be €226 million with EBIT of €14 million.

Credit Suisse bullish on Nokia

In a sum-of-the-parts analysis, Credit Suisse estimates NSN’s value at €2.5 per share, HERE maps at €0.30, Advanced Technologies at €2.2, €0.70 a share in net deferred tax assets and €1.6 per share in net cash. Garcha doesn’t see any big decline in NSN’s margin, and sees immense value in Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s IPR business. Credit Suisse has an Outperform rating on the stock with €7.25 price target.

American shares of Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) jumped 0.77% to $7.86 at 9:34 AM EST.