Nokia Tops on Q1 Earnings, Misses Revs - Analyst Blog

Nokia Corp. NOK reported first-quarter 2014 financial results wherein the bottom line surpassed the Zacks Consensus Estimate, while the top line missed the same. Stiff competition from Apple Inc.'s AAPL iPhones and Google Inc's GOOG Android-based smartphones have compelled Nokia to sell its Device business to Microsoft Corp. MSFT for $7.5 billion on Apr 25, 2014. Nokia currently has a Zacks Rank #1 (strong Buy).

Quarterly net income from continuing operations came in at approximately $152.3 million or 4 cents per share compared with a net loss of $359 million or 9 cents per share in the prior-year quarter. However, quarterly adjusted (excluding special items) earnings per share of 6 cents were better than the Zacks Consensus Estimate of 4 cents.

On the other hand, quarterly net revenue stood at approximately $3,688 million, a stiff year-over-year fall of 15% and also lagged the Zacks Consensus Estimate of $3,987 million.  

Quarterly adjusted gross margin was 45.7% in first-quarter 2014 compared with 39.3% in the prior-year quarter. Adjusted operating margin, in the reported quarter, was 9.1% as against a negative 1% in the year-ago quarter.

At the end of the first quarter of 2014, Nokia had approximately $2,908 million of net cash and marketable securities compared with $3,185 million at the end of 2013. 

Nokia Solutions and Networks Segment

Quarterly total revenue was approximately $3,223 million in first-quarter 2014, down 17% year over year. Quarterly adjusted operating profit was approximately $299 million, up 10% year over year. However, adjusted operating margin was 9.3% compared with 7% in the prior-year quarter.

HERE Segment

Quarterly total revenue was approximately $290 million in first-quarter 2014, down 3% year over year. Quarterly adjusted operating profit stood at $138 million against a negative $7 million in the prior-year quarter. Adjusted operating margin was 4.8% against a negative 2.3% in the year-ago quarter.

Advanced Technology Segment

Quarterly total revenue was approximately $181 million in first-quarter 2014, up 7% year over year. Quarterly adjusted operating profit was approximately $119 million, up 18% year over year. Adjusted operating margin was 65.6% compared with 59.3% in the prior-year quarter.

Outlook

For fiscal 2014, adjusted operating margin for the Nokia Solutions and Networks segment is likely to be in the higher-end of the 5%–10% range.

Capital Restructuring Program

Nokia has initiated a Euro 5.0 billion (approximately $6.9 billion) capital restructuring program. The company intends to initiate a Euro 1.25 billion share buy-back program and will pay a special dividend of Euro 0.26 per share totaling Euro 1 billion. The remaining Euro 2.75 billion will be utilized to reduce debt level.