CHICAGO, Jan. 28, 2011 /PRNewswire/ -- Zacks.com Analyst
Blog features: Nokia Corp. (NYSE: NOK), Siemens AG
(NYSE: SI), Motorola Solutions Inc. (NYSE: MSI), Apple
Inc. (Nasdaq: AAPL) and Research In Motion Ltd. (Nasdaq:
RIMM).
(Logo:
http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
Get the most recent insight from Zacks Equity Research with the
free Profit from the Pros newsletter:
http://at.zacks.com/?id=4579
Here are highlights from Thursday's Analyst Blog:
Nokia Beats but Outlook
Weak
Nokia Corp. (NYSE: NOK), the largest mobile phone
manufacturer of the world, declared its fourth quarter 2010
financial results, which beat both the top line and bottom line of
the Zacks Consensus Estimates. Favorable product-mix biased toward
converged mobile devices (smartphones & mobile computers)
resulted in higher average selling price (ASP).
However, Nokia has provided a weak financial outlook for its
core Devices & Services segment. Additionally, Nokia Siemens
Networks, a joint venture between Nokia and Siemens AG
(NYSE: SI), is facing a legal battle from Huawei Technologies of
China regarding its proposed
acquisition of wireless infrastructure assets of Motorola
Solutions Inc. (NYSE: MSI).
Quarterly net revenue was approximately $17,206 million, up 6% year over year and also
above the Zacks Consensus Estimate of $16,864 million. This was primarily due to the
significantly higher sales from the NAVTEQ segment.
Quarterly net income was approximately $1,009 million or 27
cents per share compared with a net income of $1,200 million or 35
cents per share in the prior-year quarter. The fourth
quarter 2010 adjusted (excluding special items) EPS was
30 cents, which was significantly
above the Zacks Consensus Estimate of 25
cents.
Quarterly operating income was approximately $1,202 million compared with $1,552 million in the year-ago quarter. Operating
margin in the same quarter was 9% compared with 9.5% in the
year-ago quarter. Operating cash flow in the reported quarter was
more than $3.31 billion, up 59% year
over year.
At the end of fiscal 2010, the company had around $9.52 billion of net cash and marketable
securities compared with $5 billion
of net cash and marketable securities at the end of fiscal 2009. At
the end of fiscal 2010, Nokia's net debt-equity ratio was a
negative 29% compared with a negative 25% at the end of fiscal
2009.
Devices & Services Segment
Quarterly revenue was approximately $11,559 million, up 4% year over year. The
increase was attributable to higher volumes in most regions driven
by stronger demand and higher ASP. This segment continues to
generate the bulk (67.2%) of total revenue.
In the reported quarter, ASP was around $94, up 7.8% year over year and also up 6.2%
sequentially. However, gross margin was 29.2% compared with 34.3%
in the same quarter of the previous year. Adjusted operating margin
was 11.3% compared with 15.4% in the year-ago quarter.
In the fourth quarter of 2010, Nokia shipped 123.7 million
mobile handsets, down 3% year over year but up 12% sequentially. As
a result, global market share of Nokia declined to 31% from 35% in
the yea–ago. However, Nokia shipped a higher percentage of
high-margin converged mobile devices in the same quarter. The
company shipped 28.3 million converged mobile devices, up 36% year
over year and 7% sequentially.
Nokia Siemens Network Segment
Quarterly revenue was approximately $5,387 million, up 9% year over year. Increase in
revenue is mainly due to higher sales in North America, Latin
America, and Asia-Pacific.
However, adjusted operating margin was 3.7% compared with 5.5% in
the same quarter of the previous year.
NAVTEQ Segment
Quarterly revenue was approximately $420
million, up 37% year over year. The increase was due to
improved conditions in the automotive industry and growth in mobile
devices sales. Adjusted operating margin was 32.4% compared with
24% in the same quarter of the previous year.
Future Industry outlook
Nokia is expecting its first quarter 2011 revenue for the
Devices & Services segment to be within the range of
approximately $9.25 billion - $9.93
billion. The company expects an adjusted operating margin of
7%-10% in its core Devices & Services segment in the first
quarter of 2011.
The first quarter 2011 revenue for the Nokia Siemens Networks is
expected between $3.8 billion - $4.2
billion. Adjusted operating margin is expected between -3%
to a break-even in the same quarter.
Recommendation
Nokia's free fall in the smartphone market is continuing owing
to huge competitive threat from Apple Inc. (Nasdaq: AAPL),
Research In Motion Ltd. (Nasdaq: RIMM), Samsung, and HTC.
More dangerous signal is that the company is quickly losing its
market share in the emerging markets to low-cost Chinese,
Taiwanese, and Indian handset developers. These are the key markets
for the company's future sustainability.
We maintain our long-term Neutral recommendation for Nokia.
Currently, it has a short-term Zacks #3 Rank (Hold) on the
stock.
Want more from Zacks Equity Research? Subscribe to the free
Profit from the Pros newsletter: http://at.zacks.com/?id=5514.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and
qualitative analysis to help investors know what stocks to buy and
which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly
traded stocks. Our analysts are organized by industry which gives
them keen insights to developments that affect company profits and
stock performance. Recommendations and target prices are six-month
time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides
highlights of the latest analysis from Zacks Equity Research.
Subscribe to this free newsletter today:
http://at.zacks.com/?id=5516
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc.,
which was formed in 1978 by Leonard
Zacks. As a PhD in mathematics Len knew he could find
patterns in stock market data that would lead to superior
investment results. Amongst his many accomplishments was the
formation of his proprietary stock picking system; the Zacks Rank,
which continues to outperform the market by nearly a 3 to 1 margin.
The best way to unlock the profitable stock recommendations and
market insights of Zacks Investment
Research is through our free daily email newsletter; Profit from
the Pros. In short, it's your steady flow of Profitable ideas
GUARANTEED to be worth your time! Register for your free
subscription to Profit from the Pros at
http://at.zacks.com/?id=4580.
Visit http://www.zacks.com/performance for information about the
performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/ZacksResearch
Join us on Facebook:
http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results.
Investors should always research companies and securities before
making any investments. Nothing herein should be construed as an
offer or solicitation to buy or sell any security.
Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com
SOURCE Zacks Investment Research, Inc.