Nokia's Q3 Not as Bad as Feared
Nokia Corp. (NYSE: NOK) reported third quarter results before markets opened this morning. The mobile handset maker posted a net loss of €0.07 (about $0.09) per share on revenues of €7.2 billion (about $9.4 billion). In the same period a year ago, the company reported earnings per share of €0.03 on revenues of €8.98 billion. Third-quarter results compare to the Thomson Reuters consensus estimates for a net loss of $0.13 per share and $9.03 billion in revenues.
The company's CEO said:
As we expected, Q3 was a difficult quarter in our Devices & Services business; however, we are pleased that we shifted Nokia Group to operating profitability on a non-IFRS basis. ... While we continue to focus on transitioning Nokia, we are determined to carefully manage our financial resources, improve our competitiveness, return our Devices & Services business to positive operating cash flow as quickly as possible, and ultimately provide more value to our shareholders.
Nokia's outlook for the fourth quarter appears to be on track for a seventh consecutive quarter of losses. The company predicts a negative operating margin of 6%, plus or minus 4%. Nokia says that the fourth quarter is a "ramp up quarter for our new Lumia products." The transition to new products also means that the usual seasonal volume spike will not take place this year. Nokia does expect its Nokia Siemens Networks joint venture to post an adjusted operating margin of 8%, plus or minus 4%.
While not as bad as feared, Nokia's quarterly results do not inspire a lot of confidence. Next quarter looks to be another loser and the ramp-up to sales of the new Lumia phones based on the Windows Phone 8 operating system from Microsoft Corp. (NASDAQ: MSFT) could mean that sales will not really generate any kind of volume until the second quarter of next year.
In any event, Nokia's shares are up about 3% in premarket trading at $2.94 in a 52-week range is $1.63 to $7.38. Thomson Reuters had a consensus analyst price target of around $2.33 before today's report.