Market 'Apprehensive' On Nokia Earnings, But JP Morgan Sees Improvement Coming

In a report issued Monday, JP Morgan analysts Sandeep Deshpande, Chetan Udeshi and Rod Hall looked into Nokia NOK ahead of the announcement of the company’s Q2 earnings call.

After the tech company reported its worst quarter in two years a couple of months ago (on increased price pressure), the analysts think the market is “apprehensive about the 2Q15 report.” However, they believe the company will deliver a sequential improvement in earnings in the network segment, “though with rationalization in opex to be much more 2H15 loaded, guidance will also likely be of continuing margin improvement from the 1Q15 low.”

JP Morgan is modeling Q2 group sales of €3.35 billion, 1 percent above consensus. The firm projects network and HERE division sales modestly atop the Street, partially offset by lower-than-expected Technologies division sales.

In addition, Ericsson (ADR) ERIC recently reported a sequential improvement in results on the back of stronger sales in China, India and South East Asia. Nokia has a strong market share in all of these regions: it is the leading Western LTE supplier in China, top wireless equipment vendor in India -- along with Ericsson, and has a respectable share in SE Asia.

“Thus if Nokia sees similar revenue trends from those regions, then we believe it too should see improved results in 2Q15,” they analysts conclude.

Nokia is scheduled to report results on July 30.