UPDATE: Goldman Sachs Cuts Nokia (NOK) to Sell; Sees Little in S/T Recovery, M&A Potential
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Price: $3.76 +0.80%
Rating Summary:
10 Buy, 14 Hold, 15 Sell
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Up: 0 | Down: 0 | New: 6
Rating Summary:
10 Buy, 14 Hold, 15 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 6
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(Updated - August 3, 2012 8:27 AM EDT)
Nokia (NYSE: NOK) shares are surprisingly un-pressured Friday following a reduced outlook by one major analyst firm.
Goldman Sachs cut its rating on Nokia from Neutral to Sell earlier, with a price target of €1.30 ($1.60 per ADR).
Following reports that Nokia will unveil two new devices based around Microsoft's (Nasdaq: MSFT) Windows Phone 8 (WP8) at Nokia World in September, Goldman analyzed the market potential for Nokia. Given that WP8 might capture 20 percent of the smartphone market and Nokia taking 20 percent of that share, that puts the company with overall smartphone market share of four to five percent.
Goldman is also bearish on near-term prospects for Nokia in M&A, issuing the following reasons: "1) we continue to see the potential for Nokia to attempt to crystallize value out of NSN, potentially in a Private Equity transaction (we assume a carrying value of €2.5 bn in our SOTP), 2) that Navteq & Device IPR may also attract interest (we assume a carrying value of €3 bn in our SOTP), but that 3) Nokia’s current fixed cost, employee and scale attributes in its Mobile Phone business (leading to large
cash burn given our view of continuing market share erosion)."
Looking to 2013, Goldman noted that Nokia might face a liquidity issue if it doesn't perform a full portfolio refresh by then. The firm commented that "[a] scenario of a slow or unsuccessful product turn-around strategy may therefore entail market share erosion in 2013 at the same pace that we expect in 2012 (c.6 pp of aggregate share loss as opposed to our assumption of 4 pp of unit market share erosion in 2013). We estimate that such a scenario suggests incremental cash consumption of €1 bn into late 2013 in the absence of much more drastic cost restructuring exercises compared to our current forecasts."
Nokia is up 2.2 percent in early trading.
For an analyst ratings summary and ratings history on Nokia click here. For more ratings news on Nokia click here.
Shares of Nokia closed at $2.27 yesterday, with a 52 week range of $1.63-$7.38.
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Nokia (NYSE: NOK) shares are surprisingly un-pressured Friday following a reduced outlook by one major analyst firm.
Goldman Sachs cut its rating on Nokia from Neutral to Sell earlier, with a price target of €1.30 ($1.60 per ADR).
Following reports that Nokia will unveil two new devices based around Microsoft's (Nasdaq: MSFT) Windows Phone 8 (WP8) at Nokia World in September, Goldman analyzed the market potential for Nokia. Given that WP8 might capture 20 percent of the smartphone market and Nokia taking 20 percent of that share, that puts the company with overall smartphone market share of four to five percent.
Goldman is also bearish on near-term prospects for Nokia in M&A, issuing the following reasons: "1) we continue to see the potential for Nokia to attempt to crystallize value out of NSN, potentially in a Private Equity transaction (we assume a carrying value of €2.5 bn in our SOTP), 2) that Navteq & Device IPR may also attract interest (we assume a carrying value of €3 bn in our SOTP), but that 3) Nokia’s current fixed cost, employee and scale attributes in its Mobile Phone business (leading to large
cash burn given our view of continuing market share erosion)."
Looking to 2013, Goldman noted that Nokia might face a liquidity issue if it doesn't perform a full portfolio refresh by then. The firm commented that "[a] scenario of a slow or unsuccessful product turn-around strategy may therefore entail market share erosion in 2013 at the same pace that we expect in 2012 (c.6 pp of aggregate share loss as opposed to our assumption of 4 pp of unit market share erosion in 2013). We estimate that such a scenario suggests incremental cash consumption of €1 bn into late 2013 in the absence of much more drastic cost restructuring exercises compared to our current forecasts."
Nokia is up 2.2 percent in early trading.
For an analyst ratings summary and ratings history on Nokia click here. For more ratings news on Nokia click here.
Shares of Nokia closed at $2.27 yesterday, with a 52 week range of $1.63-$7.38.
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