), the world's largest mobile phone maker, is slated to release its
first quarter 2012 results on Thursday, April 19, before the
opening bell. The current Zacks Consensus Estimate for the first
quarter is a loss of 5 cents, representing a decline of 129.7% from
the year-ago quarter.
With respect to earnings surprises over the trailing four
quarters, Nokia has outperformed the Zacks Consensus Estimate in
all the four quarters. The average earnings surprise was a positive
228.53%, implying that the company has outdone the Zacks Consensus
Estimate by the same magnitude over the last four quarters.
Fourth Quarter Recap
On January 26, 2012, Nokia reported its fourth quarter 2012
financial results. Quarterly net loss was approximately $1286.9
million or a loss of 39 cents per share compared with a net income
of $1,192.5 million or 27 cents per share in the prior-year
quarter. However, adjusted (excluding special items) EPS of 8 cents
per share in the reported quarter beat the Zacks Consensus Estimate
of 6 cents.
Quarterly net revenue was approximately $13,496.7 million, down
21% year over year, but was above the Zacks Consensus Estimate of
$13,407 million. Adjusted operating margin in the fourth quarter
was 4.8% compared with 8.6% in the year-ago quarter.
Agreement of Estimate Revisions
In the last 30 days, out of the 19 analysts covering the stock,
none increased the estimate for the first quarter of 2012 while 13
analysts decreased estimates during the same period. Similarly, for
the second quarter of 2012, out of the 19 analysts covering the
stock, 13 analysts slashed the estimate while none increased.
For fiscal 2012, in the last 30 days, out of the 23 analysts
covering the stock, 14 analysts decreased the estimate. For fiscal
2013, out of the 22 analysts covering the stock, 10 analysts
reduced the estimate while none moved the estimate upward.
The analysts with a bearish outlook remain apprehensive about
the success of the company's newly launched Windows Phone 7 based
Lumia handsets. Moreover, we believe that the continuous loss of
market share due to stiff competition from other smartphone
manufacturers will further create doubt in the mind of these
Magnitude of Estimate Revisions
The large number of downward revisions for the first quarter of
2012 pulled down the Zacks Consensus Estimate by 4 cents to a loss
of 6 cents. For the second quarter of 2012,the Zacks Consensus
Estimate went from earnings of 2 cents to a loss of 4 cents. For
fiscal years 2012 and 2013, the Zacks Consensus Estimate lost 19
cents and 14 cents, respectively to touch $0.00 and$0.23,
The first and second quarter of 2012 represent a 40.00% and
66.67% downside potential (essentially a proxy for future earnings
surprises), respectively. Likewise, for fiscal 2012 and 2013it
reflects a downside risk of 433.33% and 36.00%, respectively.
Continuous loss of market share and stiff competition from
Android-based smartphones and
) iPhone 4S coupled with lukewarm response for the new Lumia series
of Windows-based handsets may act as the headwinds for the stock
going forward. Moreover, the company suffered a serious software
glitch for the Lumia 900 device, its much hyped first 4G LTE
enabled smartphone. Such poor performance may create doubts in the
mind of the investors. We thus maintain our long-term Underperform
recommendation for Nokia.
Currently, Nokia has a Zacks #5 Rank, implying a short-term
Strong Sell rating on the stock.
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