Nokia (NOK) Tops Q4 EPS by 2c

Nokia (NYSE: NOK) reported Q4 EPS of EUR0.11, EUR0.02 better than the analyst estimate of EUR0.09. Revenue for the quarter came in at EUR3.8 billion, versus EUR3.5 billion reported last year.

Segment Highlights:

Nokia Networks

• Nokia Networks achieved 8% year-on-year growth in net sales, from EUR 3.1 billion in Q4 2013 to EUR 3.4 billion in Q4 2014, primarily due to strong performance in North America.
• Nokia Networks achieved strong underlying operating profitability with non-IFRS operating profit of EUR 470 million, or 14.0% of net sales, compared to EUR 349 million, or 11.2% of net sales, in Q4 2013.
• Mobile Broadband achieved 13% year-on-year increase in net sales, driven by strong growth in overall core networking technologies and modest growth in overall radio technologies. Within radio technologies, strong year-on-year growth in LTE was partially offset by a decline in mature radio technologies.
• Global Services returned to year-on-year growth for the first time since Q4 2012, with net sales up by 3% and particularly strong growth in the strategically important systems integration business line.

HERE

• HERE achieved 15% year-on-year growth in net sales, from EUR 255 million in Q4 2013 to EUR 292 million in Q4 2014, primarily due to HERE's leading market position and positive trends in the automotive market.
• In Q4 2014, HERE sold map data licenses for the embedded navigation systems of 3.9 million new vehicles, compared to 3.2 million vehicles in Q4 2013.

Nokia Technologies

• Nokia Technologies achieved 23% year-on-year growth in net sales, from EUR 121 million in Q4 2013 to EUR 149 million in Q4 2014, primarily due to Microsoft becoming a more significant intellectual property licensee in conjunction with the sale of substantially all of Nokia's Devices & Services business to Microsoft, as well as higher intellectual property licensing income from certain other licensees.
• In Q4 2014, Nokia Technologies non-IFRS operating expenses increased both year-on-year and sequentially primarily due to investments in business activities, which target new and significant long-term growth opportunities, as well as increased activities related to anticipated and ongoing patent licensing cases.

NOKIA'S OUTLOOK

• Nokia continues to expect Nokia Networks' net sales to grow on a year-on-year basis for the full year 2015.
• Nokia continues to expect Nokia Networks' non-IFRS operating margin for the full year 2015 to be in-line with Nokia Networks' long-term non-IFRS operating margin range of 8% to 11%.
• Nokia's outlook for Nokia Networks net sales and non-IFRS operating margin is based on expectations regarding a number of factors, including:
  • competitive industry dynamics;
  • product and regional mix;
  • the timing of major network deployments; and
  • expected continued operational improvement.
• Nokia expects Nokia Networks' net sales and non-IFRS operating margin in the first quarter 2015 to decline seasonally compared to the fourth quarter 2014. Note that Nokia Networks non-IFRS operating margin benefited from a relatively high proportion of software sales in the first quarter 2014.
• Nokia continues to expect HERE's net sales to grow on a year-on-year basis for the full year 2015.
• Nokia now expects HERE's non-IFRS operating margin for the full year 2015 to be between 7% and 12%, based on HERE's leading market position, positive industry trends and improved focus on cost efficiency. This compares to Nokia's previous outlook for HERE's non-IFRS operating margin for the full year 2015 to be between 5% and 10%.
• Nokia continues to expect Nokia Technologies' net sales to grow on a year-on-year basis for the full year 2015, excluding potential amounts related to the expected resolution of our ongoing arbitration with Samsung, which is expected to be concluded during 2015.
• Nokia continues to expect Nokia Technologies' non-IFRS operating expenses to increase meaningfully on a year-on-year basis for the full year 2015. More specifically, Nokia expects Nokia Technologies' quarterly non-IFRS operating expenses in 2015 to be approximately in-line with the fourth quarter 2014 level. This is related to higher investments in licensing activities, licensable technologies, and business enablers including go-to-market capabilities, which target new and significant long-term growth opportunities.
• Nokia continues to expect Nokia Group capital expenditures to be approximately EUR 200 million in 2015, primarily attributable to capital expenditures by Nokia Networks.
• Nokia continues to expect Nokia Group financial income and expenses, including net interest expenses and the impact from changes in foreign exchange rates on certain balance sheet items, to amount to an expense of approximately EUR 160 million in 2015, subject to changes in foreign exchange rates and the level of interest-bearing liabilities.
• Nokia continues to expect Group Common Functions non-IFRS operating expenses to be approximately EUR 120 million in 2015.
• Nokia continues to target to record tax expenses in Nokia Group's Consolidated Income Statements at a long-term effective tax rate of approximately 25%. However, Nokia targets Nokia Group's cash tax obligations to continue at approximately EUR 250 million annually until Nokia Group's deferred tax assets have been fully utilized. The cash tax amount may vary depending on profit levels in different jurisdictions and the amount of license income potentially subject to withholding tax.

For earnings history and earnings-related data on Nokia (NOK) click here.

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