This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Nokia Expected to Post Ho-Hum Results

Nokia (NOK - Get Report) is heading into a seasonally weak period that is neither too hot nor too cold, leaving many analysts to believe its first-quarter earnings results will be just as tepid.

The Espoo, Finland-based handset maker is set to post first-quarter results Thursday before the opening bell. According to the Thomson First Call summary, analysts expect Nokia to post a profit of 57 cents a share on $19.84 billion in sales. While revenue has grown sequentially over the last three quarters, if the company posts sales in line with estimates, it would be a decline of nearly 13% from the previous quarter.

Nokia is coming off a sparkling fourth quarter where handset sales hit 133.5 million in shipments. Still, open interest in Nokia options is somewhat balanced with not a lot of volume, indicating that investors don't expect much out of the forthcoming earnings report. Shares of the company are already down 15% on the year, hampered by fears of an economic downturn.

Two examples came in March, when Texas Instruments (TXN - Get Report) lowered its quarterly forecast, saying demand for chips used in high-end, 3G cell phones deteriorated significantly. Not long after, Sony-Ericsson, the joint venture of Ericsson (ERIC - Get Report) and Sony (SNE - Get Report), warned of slowing sales in its line of midrange and high-end cell phones.

"We expect March to come in good, but not great, with guidance for 2008 industry units consistent with 10% growth forecasts," said American Technology Research analyst Mark McKechnie in a note. " Forecasts have been quite volatile, with high expectations going into the quarter and fear around Texas Instruments and Sony-Ericsson misses."

McKechnie expects a tough earnings season as many handset makers contend with post holiday inventory adjustments and macro economic concerns that have already hit companies like General Electric (GE - Get Report) and more notably Bear Stearns (BSC).

However, a slight nod from Nokia CFO Rick Simonson at the end of March has calmed analysts and investors, instilling them with a bit of optimism.

"Whatever slowdown is happening in the U.S., we're less relatively affected than others," said Simonson during an interview with Bloomberg TV on March 25. "Europe is a mixed case and that's what we had as our expectation going into the year."

Simonson said that less than 5% of the company's business comes from the U.S. He added that growth in Brazil, Russia, India, China and Turkey have helped offset the weakness in Europe. Those BRIC countries have attributes that indicate high sales for mid- and high-end devices, he said.

Nokia "is preparing a major re-emphasis into the U.S., a market where the company historically had numerous challenges," according to RBC Capital Markets analyst Mark Sue. Because of this change, he expects the competition to chip away at Motorola (MOT), which is already struggling to turn around its handset unit.

But there are still headwinds out there for the company. For one, its acquisition of navigation device maker Navteq (NVT) may be in jeopardy after the European Commission said it is pushing further with an investigation into whether the $8.1 billion deal breaks antitrust regulations.

The average sales price per phone, or ASP, is also a concern for Nokia. In the fourth quarter, ASP fell to $121.70 from $130.50 a year ago. AmTech's McKechnie said that he expects to see "stronger units and solid margins partially offset by weaker ASPs."

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
ERIC $12.72 -0.86%
GE $24.86 0.22%
NOK $7.70 0.72%
SNE $26.77 0.87%
TXN $55.86 0.11%

Markets

DOW 17,693.38 +15.15 0.09%
S&P 500 2,058.59 +2.44 0.12%
NASDAQ 4,877.2240 +13.8620 0.28%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs