Nokia Corporation (ADR) (NOK) Q4: Mixed Results, Declining Margins

Nokia Corporation (ADR) (NOK) Q4: Mixed Results, Declining Margins
Hermann / Pixabay

BMO Capital Markets analysts Tim Long, Alex Spektor and Ari Klein rate Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) as Market Perform as the smartphone maker announces mixed results with solid top-line figures for NSN and HERE.

Play Quizzes 4

Nokia’s earnings

Results for Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) were mixed, with solid top-line figures for NSN and HERE and weakness in Advanced Technologies and the discontinued handset business. March guidance was a bit weak, putting pressure on the back end to meet full-year targets. We expect NSN revenues to decline slightly in 2014 after an 18% drop in 2013, with operating margins down 150 – 200 bp. We are discouraged by the outlook for the now independent Advanced Technologies IPR licensing business. We believe guidance implies no growth in 2014 (ex-MSFT), which followed no growth in 2013.

This Long/ Short Equity Firm Sees A Time-Arbitrage Opportunity In This Pest Control Merger

PestYost Partners was up 0.8% for the first quarter, while the Yost Focused Long Funds lost 5% net. The firm's benchmark, the MSCI World Index, declined by 5.2%. The funds' returns outperformed their benchmark due to their tilt toward value, high exposures to energy and financials and a bias toward quality. In his first-quarter letter Read More

Operating margins in the low 60% range were not as high as we would have expected, either. The HERE business is struggling as well, with margins likely lower again in 2014. We are changing our 2014 EPS estimates from EUR0.35 to EUR0.19 and introducing a 2015 EPS estimate of EUR0.23. Our model assumes that the Microsoft Corporation (NASDAQ:MSFT) deal closes in Q1 and that Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) starts a meaningful stock repurchase program in Q2.

Impact and Analysis

Each of the three major businesses saw revenues decline in 2013, and we don’t expect much of a top-line rebound this year. We are most concerned about declining margins in NSN as the company gets more aggressive and in the lack of growth in royalty revenues.

Valuation and recommendation for Nokia

Our price target of US$6.50, down from US$7, assumes that Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) trades at 20x the 2015 pro forma EPS of US$0.32. We rate NOK shares Market Perform.

Updated on

Sheeraz is our COO (Chief - Operations), his primary duty is curating and editing of ValueWalk. He is main reason behind the rapid growth of the business. Sheeraz previously ran a taxation firm. He is an expert in technology, he has over 5.5 years of design, development and roll-out experience for SEO and SEM. - Email: sraza(at)
Previous article The Classic Shelby Davis Double Play
Next article J.C. Penney Company, Inc. (JCP) Steps Up Promotions Amid Store, Job Reductions

No posts to display