) witnessed mixed estimate revisions after the third quarter
earnings announcement on October 18, 2012. The mixed view is
based on a welter of conflicting factors. On the positive, Nokia
reported better-than-expected results and the launch of its
latest Lumia offering with
) in November is expected to drive growth. On the other hand,
management's disappointing outlook for the upcoming quarter,
despite the crucial holiday season, raises concern.
Third Quarter Recap
On October 18, Nokia reported its third-quarter 2012 financial
results. Quarterly net loss was approximately $1,180 million or
33 cents per share compared with a net loss of $189 million or 3
cents per share in the prior-year quarter. However, on an
adjusted basis (excluding special items), the loss came in at 9
cents per share, narrower than the Zacks Consensus Estimate of a
loss of 12 cents.
Nokia posted quarterly net revenue of approximately $9,057
million, down 19% year over year but above the Zacks Consensus
Estimate of $8,890 million. Operating margin in the third quarter
was negative 8%, far worse than negative 0.8% in the year-ago
quarter. Nokia sold 6.3 million smartphones in the third quarter
of 2012 as compared to 56.3 million and 26.9 million smartphones
sold by Samsung and Apple, respectively.
Read our full coverage on this earnings report:
Nokia Beats, Outlook Grim
Agreement of Estimate Revisions
In the last 7 days, out of total 18 estimates, there were no
revisions in either direction for the third quarter of 2012.
Similarly, for the fourth quarter out of total 14 estimates, no
revisions were witnessed over the same time frame.
Out of total 18 estimates, 9 estimates were revised upward
while only two estimates moved in the opposite directions for
third quarter over the last one month. For the fourth quarter, 8
out of 14 estimates moved north while only 3 moved south over the
same time period.
Over the past one week, out of 24 estimates, only one moved
upward while none moved in the opposite direction for 2012. The
story is similar for 2013, were only one upward revision was
witnessed among 24 estimates over the same time frame.
In the last 30 days, 16 out of 24 estimates were revised
upward while 3 estimates moved in the opposite direction for
2012. For 2013, out of 24 estimates, half of the estimates headed
north while only three moved south over the same time period.
Magnitude of Estimate Revisions
Over the last 7 days, the current Zacks Consensus Estimate
remained flat for the third and fourth quarter of 2012. Over the
last 30 days, the current Zacks Consensus Estimate has improved
only by a penny to a loss of 5 cents for the third quarter of
2012, while it remained unchanged for the fourth quarter.
Over the last 7 days, the current Zacks Consensus Estimate has
remained unchanged for 2012 while it has deteriorated by a penny
for 2013. On the contrary, over the last 30 days, the current
Zacks Consensus Estimate has improved by 4 cents to a loss of 35
cents for 2012, while it has remained unchanged at 3 cents for
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 and going forward it might face tough
competition from Asian manufacturers - Samsung Electronics Co.
and HTC Corp., which have recently come up with their own
However, we believe Nokia is still a strong brand and
possesses a strong portfolio of 30,000 patents and around 10,000
patented innovations in its arsenal. The company is trimming its
patent assets to improve its cash position. Furthermore,
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 margins going forward.
We maintain our long-term Neutral recommendation on Nokia
Corp. Currently, it retains a Zacks #3 Rank (a short-term Hold
About Earnings Estimate Scorecard
Len Zacks, PhD in mathematics from MIT, proved over 30 years
ago that earnings estimate revisions are the most powerful force
impacting stock prices. He turned this ground breaking discovery
into two of the most celebrating stock rating systems in use
today. The Zacks Rank for stock trading in a 1 to 3 month time
horizon and the Zacks Recommendation for long-term investing (6+
months). These "Earnings Estimate Scorecard" articles help
analyze the important aspects of estimate revisions for each
stock after their quarterly earnings announcements. Learn more
about earnings estimates and our proven stock ratings at:
APPLE INC (AAPL): Free Stock Analysis Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis
MICROSOFT CORP (MSFT): Free Stock Analysis
NOKIA CP-ADR A (NOK): Free Stock Analysis
AT&T INC (T): Free Stock Analysis Report
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