The hard times for
) witnessed in 2012 seems to be partially over as the Finnish
handset manufacturer reported a better-than-expected performance
in the fourth quarter of 2012 in its preliminary financial
report. Good shows by the company's flagship smartphone, Lumia
920 along with the ongoing cost cutting initiatives are mainly
attributable for the impressive results.
Strong Performance in Fourth Quarter
This is for the first time in almost a year that the company
is reporting an increase in smartphone shipments.
The preliminary report shows that Nokia sold 4.4 million Lumia
devices in the fourth quarter of 2012 compared to only 2.9
million units in the previous quarter, marking a sequential
growth of almost 52%. Sales of smartphone and total handset
business stood at 6.6 million and 79.6 million respectively
compared to with 6.3 million and 76.6 million at the end of the
third quarter of 2012. The shareholders welcomed the news as the
stock soared 18.67% on Thursday to close at $4.45 at Nasdaq.
Financially also the company's device and service segment
performed better than the last quarter, reporting a sequential
growth of almost 15%.
Nokia-Siemens Network (NSN) - the company's equal joint
), has also performed better than expected as the company is
concentrating on higher margin wireless network. Additionally,
the company's strategic policy of retrenching employees and
selling its non-core units seems to have helped the company, as
it is all set to deliver solid financial performance in the
2012 has been a real bad year for Nokia as the company lost
its title as the world's largest cell phone manufacturer to
Samsung Electronics. Amid stiff competition from
) Android and
) iOS-based phones, the company lost its smartphone leadership.
To make matters worse, the company's credit status was downgraded
to junk and the company has to cut as much as 10,000
Are Good Times Really Back for Nokia?
It appears that the company's decision to join hands with
) is finally paying its dividend as the large screen Lumia 920
with some great imaging and mapping feature is attracting more
customers. Reportedly, Nokia witnessed supply shortages in
several countries for its Lumia 820 and 920, which otherwise
could have yielded a better outcome.
According to research firm IDC, at the end of the third
quarter, Samsung and Apple have shipped 56.3 million and 26.9
million smartphones and also garnered a far significant market
share in the smartphone market. With Lumia 920 bringing in a
fresh breadth of life for the company, we believe Nokia needs to
be much more consistent to turn the tables in its favor.
Things are really looking bright for the struggling handset
manufacturer in the last few days. But that does not mean
everything has started to run smoothly for the company. Despite
the impressive Lumia performance, the total handset sale in
fourth quarter is expected to touch 86.3 million handsets, down
24% from the previous year quarter. Along with it the quarterly
sales of $5.1 billion failed to match the sales figure of $7.8
billion, reported in the fourth quarter of 2011.
However, moving forward the company expects to overcome its
supply shortages associated with Lumia 920 and wants to expand in
emerging markets like India, which has been a strong hunting
ground for the company.
We maintain our long-term Neutral recommendation on Nokia
Corporation. Currently, it holds a short-term Zacks Rank #3
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