) is slated to release its second quarter 2012 results on Thursday,
July 19, before the opening bell. The current Zacks Consensus
Estimate projects a loss of 11 cents per share for the second
quarter, representing a decline of 218.89% from the year-ago
With respect to earnings surprises over the trailing four
quarters, Nokia has outperformed the Zacks Consensus Estimate in
three out of the four quarters. The average earnings surprise was a
positive 206.55%, implying that the company has outdone the Zacks
Consensus Estimate by the same magnitude in three out of the last
First Quarter Recap
On April 19, 2012, Nokia reported its first quarter 2012
financial results. Quarterly net loss was approximately $1,200
million or a loss of 33 cents per share compared with a net income
of $300 million or 12 cents per share in the prior-year quarter.
However, adjusted EPS (excluding special items) of a loss of 11
cents per share in the reported quarter was significantly higher
than the Zacks Consensus Estimate of a loss of 6 cents.
Quarterly net revenue was approximately $9,629 million, down 29%
year over year, and well below the Zacks Consensus Estimate of
$10,053 million. Operating margin in the first quarter was a
negative 18.2% compared with 4.2% in the year-ago quarter.
Agreement of Estimate Revisions
In the last 30 days, out of the 20 analysts covering the stock,
two increased the estimate for the second quarter of 2012, while 3
analysts decreased estimates during the same period. Similarly, for
the third quarter of 2012, out of the 19 analysts covering the
stock, 3 analysts slashed the estimate, while none revised it
For fiscal 2012, in the last 30 days, out of the 24 analysts
covering the stock, 7 analysts decreased the estimate while 2
analysts increased it. For fiscal 2013, out of the 24 analysts
covering the stock, 7 analysts reduced the estimate, while none
moved the estimate upward.
The analysts remained bearish on Nokia Corp. as they believe
that fiscal 2013 will be another tough year for the company as it
battles market share losses coupled with the looming fear of
Lumia's failure. They believe that the company's decision to slash
the prices of its flagship Lumia 900 might impact its bottom
Magnitude of Estimate Revisions
During the last 30 days, the current Zacks Consensus Estimate
further declined to a loss of 11 cents from the previous estimate
of a loss of 10 cents for the second quarter of 2012, and was in
line with the earlier estimate of a loss of 7 cents for the third
quarter of 2012. For fiscal 2012, during the last 30 days, the
current Zacks Consensus Estimate further declined to a loss of 30
cents from the previous estimate of a loss of 27 cents. Similarly,
for fiscal year 2013, the current Zacks Consensus Estimate was 3
cents below the previous estimate of 5 cents.
The current Zacks Consensus Estimate for the second quarter
remains flat at 0.00%, while the third quarter reflects a downside
of 14.29% (essentially a proxy for future earnings surprises).
Likewise, for fiscal 2012, the current Zacks Consensus Estimate
remained flat at 0.00%, while fiscal 2013 reflects a downside of
Currently, Nokia is losing market share to
) iPhone and an array of smartphones that run on
) Android operating system. In spite of teaming up with
) to develop Windows based smartphones, the company's performance
was not up to the mark. However, Nokia is still a strong brand and
possesses a strong portfolio of 30,000 patents and around 10,000
patented innovations in its arsenal. Additionally, management has
opted for another 10,000 headcount reduction and plans to close
down three facilities which we believe will help the company
improve its operations going forward.
We maintain our long-term Neutral recommendation on Nokia Corp.
Currently, NOK has a Zacks #3 Rank, implying a short-term Hold
rating on the stock.
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