Nokia's (NOK) Q1 Results Give Investors Very Little to Hold On To - Nomura
Nomura Securities analyst Stuart Jeffrey offered a first look at Nokia's (NYSE: NOK) first quarter 2013 results, which has the stock down 11 percent this morning.
Jeffrey highlights:
Revenues missed by 10%;
Lumia sales were in-line but feature phones missed volumes by 10% and ASPs by 11%;
Devices and Services adj. operating margin of 0.1% was impressive given the revenue miss – driven by gross margin (25.1% vs our 22.7% forecast) and 10% lower than expected opex;
Nokia Siemens revenues missed by 8% with better than expected margins;
Guidance is weaker than expected for devices and services profitability (-6% to 0% vs consensus of -0.4%) but inline for Lumia sales volume (7.1m units vs our 7.0m forecast);
Guidance for NSN profitability is broadly in-line given a wide range of 1% to 9%; and
Cash flow was solid, with an inflow of €206m from operations (although all of this came from NSN).
"The gross margin improvement is a clear positive, but the decline in feature phone units is a material concern given the importance of this unit to driving scale and cash flow," he said. "The inability of Lumia to beat expectations is also disappointing, in our view."
He continued, "While the results call may add further detail, we see little scope for consensus numbers to remain at current levels given the likelihood that Nokia addresses the low feature phone sales with price cuts that are likely to dilute gross margins – thus undermining one of the few positives in the results."
The analyst maintained a Neutral rating and EUR 3.20 price target.
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 $3.58 yesterday, with a 52 week range of $1.63-$4.90.
Jeffrey highlights:
"The gross margin improvement is a clear positive, but the decline in feature phone units is a material concern given the importance of this unit to driving scale and cash flow," he said. "The inability of Lumia to beat expectations is also disappointing, in our view."
He continued, "While the results call may add further detail, we see little scope for consensus numbers to remain at current levels given the likelihood that Nokia addresses the low feature phone sales with price cuts that are likely to dilute gross margins – thus undermining one of the few positives in the results."
The analyst maintained a Neutral rating and EUR 3.20 price target.
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 $3.58 yesterday, with a 52 week range of $1.63-$4.90.