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Nokia in Q2: Prelim Reaction Slacker, << C
Nokia in Q2: Prelim Reaction
Slacker,
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Compared to the consensus numbers in the article (12.8 billion Euro in revenue and .34 Euros in earnings), Nokia beat both top and bottom line.
The unit volumes look good and the ASP's are only a bit below expectations.
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Well, the Reuters poll had consensus pro forma at €37 so it bounced back up from €36.
The €29 reported was ugly.
Unit volume good.
Margins good, considering.
ASP at €74 and the revenue impact a bloody a killer and markets won't like it, but its heavily forex driven and Nokia can't do much about that, intelligent hedging aside.
Unless Q4 falls totally apart (it shouldn't for Nokia) the 10% + industry unit growth number should hold.
I haven't combed the numbers yet, but all things considered it was a satisfactory quarter relative to my own expectations.
Surprisingly at 6:35 ET, NOK1V was up 7.68% at €16.97 on HEX.
I hope OPK and Rick are up to amplifying on some reasonably optimistic guidance this morning relative to the refresh in progress but given macroeconomics that isn't going to be easy to do.
This is promising however ...
"Looking at the rest of the year, we are optimistic and have had good feedback about the broad range of new products we expect to sell."
-- Olli-Pekka Kallasvuo --
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Emerging Markets Lift Nokia's Q2
Tarmo Virki
Reuters (Helsinki)
July 17, 2008
http://tinyurl.com/5a2okl
April-June underlying earnings at Nokia (NOK1V.HE: Quote: , Profile, Research, Stock Buzz), the world's biggest maker of mobile phones, rose in line with expectations, driven by robust demand for cheaper phones in emerging markets such as India.
Nokia said volumes in the mobile phone industry would grow 10 percent or more in 2008.
The company said on Thursday its earnings per share for the three months, minus special items, rose to 0.36 euros from 0.32 euros in the same period of 2007, compared with an average forecast of 0.37 euros in a Reuters poll of 31 analysts.
Nokia's average selling price for phones in the second quarter disappointed the market, falling to 74 euros from 79 euros in the previous quarter, while analysts had on average expected 77 euros.
(Reporting by, editing by Will Waterman)
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Nokia Quarterly Net Drops on Charges, Year-Ago Gain
Juho Erkheikki
Bloomberg (Update2)
July 17, 2008
http://tinyurl.com/6rbbah
Nokia Oyj, the world's biggest maker of mobile phones, said quarterly profit dropped for the first time in more than a year on charges to close a factory in Germany and gains from its network venture a year earlier.
Nokia rose as much as 6.8 percent in Helsinki trading after reporting second-quarter sales of 13.2 billion euros ($21 billion), exceeding analysts' estimates of 12.8 billion euros.
Net income fell 61 percent to 1.1 billion euros, or 29 cents a share, from 2.83 billion euros, or 72 cents, a year earlier, the Espoo, Finland-based company said in a statement today.
Slowing consumer spending in the U.S.
And Europe hurt phone sales, while the dollar's decline reduced prices.
Chief Executive Officer Olli-Pekka Kallasvuo said in April that the value of the handset market will shrink in euro terms in 2008.
Nokia aims to increase its close to 40 percent market share by introducing touch-screen phones this year, catching up with Samsung Electronics Co.
And Apple Inc.
``Nokia needs to launch compelling products in fairly short order to halt this insurgency in its tracks,'' said Richard Windsor, an analyst at Nomura International Plc in London, who advises investors buy Nokia shares.
``Smartphones are an issue.''
The stock rose as much as 1.07 euros to 16.83 euros and traded at 16.7 euros as of 1:15 p.m.
In Helsinki. Before today Nokia shares have dropped 41 percent this year, cutting its market value to 61.8 billion euros, on concern slowing economies will crimp demand.
That compares with a 29 percent decline in the 22-company Dow Jones Europe Stoxx Technology Index.
Analysts surveyed by Bloomberg predicted net income of 1.26 billion euros, or 34 cents a share.
Second-quarter revenue rose 4 percent.
Excluding one-time gains or losses, and amortization and purchase price accounting related items at the Nokia Siemens Networks venture, earnings per share were 37 cents, beating the 36-cent estimate by analysts in a Bloomberg survey.
Dollar Drop
Kallasvuo increased Nokia's market share in 2007 with handsets costing less than $50 and pricier models with satellite navigation at the expense of rivals including Motorola Inc.
Nokia gets more than half of its revenue from outside Europe and North America, while China and India are its two single biggest markets.
About half of Nokia's sales are in dollars or linked currencies.
The U.S. currency fell about 15 percent against the euro in the 12 months ending June 30.
The average selling price of Nokia's phones fell to 79 euros in the first quarter from 83 euros the previous quarter on increased sales in emerging markets.
Gartner Inc., a Stamford, Connecticut-based researcher, cut its 2008 forecast for global phone sales on July 14, citing higher living costs in emerging markets.
Gartner now forecasts the market will grow 10 percent to 11 percent this year, down from a previous prediction of as much as 15 percent growth.
Nokia closed a factory in Bochum, Germany, in June to cut costs, and the company agreed on a 200 million-euro package with unions to support the 2,300 German workers facing unemployment.
Sony Ericsson
Apple sold 1 million iPhones in the three days after the July 11 debut of a faster model, more than double some analysts' estimates.
This month, Credit Suisse analyst Gulbinder Garcha cut his recommendation on Nokia to ``neutral'' from ``outperform'' saying the company won't be able to keep its market share in advanced phones at close to 50 percent.
Nokia has predicted unit sales will likely rise about 10 percent from the 1.14 billion models sold in 2007.
The company had a market share of 39.1 percent at the end of the first quarter, according to Gartner figures.
Sony Ericsson Mobile Communications Ltd., the phone venture owned by Sony Corp.
And Ericsson AB, said June 27 that declining sales of higher-priced handsets and delays to new products wiped out second-quarter earnings.
Motorola said in March that it planned to separate its phone unit in response to falling market share and continued losses at the division.
Navteq Purchase
Nokia, whose market share tops that of its three closest competitors combined, has benefited from the widest product portfolio and dominance in emerging markets after Motorola withdrew from competing on price.
Nokia bought Navteq Corp.
For $8.1 billion to add navigation maps for mobile phones, and has teamed up with record labels to push portable music and maintain its industry lead.
The company has also grouped Internet services such as music, map and game downloads under the Ovi brand.
It has agreed with Vivendi SA's Universal Music, Sony BMG Music Entertainment and Warner Music Group Corp.
To sell phones with a year of unlimited access to millions of tracks.
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- Eric -
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Nokia Sets Positive Sector Tone ...
...
And FT picks up on it.
T'is good.
>>
Nokia Sends Bullish Signal on Demand
David Ibison in Stockholm
The Financial Times
July 17 2008
http://tinyurl.com/5bfzlc
Nokia, the world’s largest maker of mobile phones, on Thursday reported a 13 per cent year-on-year increase in earnings per share in the second quarter and sent out positive messages about future demand.
The Finnish company sells around four of every 10 mobile phones in the world, and its results are closely scrutinised for changes in consumer sentiment in developed markets and important emerging markets such as China and India.
The company quashed fears a global slowdown would undermine earnings, saying net sales rose 4 per cent to €13.2bn while its operating margin rose from 11.1 per cent in the second quarter of 2007 to 14.7 per cent.
Nokia also raised its estimate for market share to 40 per cent, up from 38 per cent in the second quarter of 2007.
The average selling price of its handsets continued its downward path, slipping to €74 from €79 in the first quarter.
The results add weight to Nokia’s longstated claim that it is able to increase market share, margins and earnings while average selling prices drop.
Shares rose strongly on the news, gaining 6.7 per cent to €16.81.
Much of the market’s interest ahead of the announcement was focused on Nokia’s outlook, especially after it spooked the market earlier this year when it announced that the global economic downturn and weakness of the US dollar had started to slow growth.
It said it expects industry mobile device volumes in 2008 to grow 10 per cent or more from the approximately 1.14bn units Nokia estimated for 2007, and continues to target an increase in its market share in mobile devices in 2008.
Olli-Pekka Kallasvuo, chief executive, said: “Nokia delivered increased device market share and strong underlying profitability in the quarter.
Looking at the rest of the year, we are optimistic and have had good feedback about the broad range of new products we expect to sell in our device business.
“
Nokia’s strong results came after the world’s fifth-largest phone maker, Sony Ericsson, warned on June 27 that it would make no profit in the April-June quarter due to weaker demand for its phones.
Nokia is the first of the major phone companies to report results.
It will be followed by LG Electronics on July 21, Samsung on July 25 and Motorola on July 31.
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- Eric -
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Unit volume good.
Margins good, considering.
ASP at €74 and the revenue impact a bloody a killer and markets won't like it, but its heavily forex driven and Nokia can't do much about that, intelligent hedging aside.
Unless Q4 falls totally apart (it shouldn't for Nokia) the 10% + industry unit growth number should hold.
I think the fact that Nokia is holding to the 10% YoY number is a good sign.
Expectations had come down so much that almost anything short of reporting armageddon had a chance at a decent reception from the market.
A reiteration about the timing of their new products as well as commentary about ASP trends during the 2nd half are likely to be the key for the call.
Slacker
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The Earnings CC (Slides)
Looks like Dr.
Kai Öistämö will be joining OPK and Rick on the CC.
That's a bit of a departure.
• Earnings Press Release (PDF)
http://www.nokia.com/results/results2008Q2e.pdf
• http://tinyurl.com/6hpvv4
- Eric
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Q2: Briefing.com Says ...
[Bolds are Briefing.com's not mine]
Market Report -- In Play (NOK), July 17, 2008 6:14 AM ET: Nokia beats by $0.01, beats on revs Reports Q2 (Jun) earnings of Euro 0.36 per share, ex items, $0.01 better than the First Call consensus of Euro 0.35;
Revenues rose 4.5% year/year to Euro 13.15 bln vs the Euro 12.55 bln consensus.
Co reports Mobile device shipments of 122 mln vs 120 mln street expectation.
Nokia expects industry mobile device volumes in the third quarter 2008 to be up sequentially.
Nokia expects its mobile device market share in the third quarter 2008 to be approximately at the same level sequentially.
Nokia now expects industry mobile device volumes in 2008 to grow 10% or more from the approximately 1.14 billion units Nokia estimated for 2007.
This is an update to Nokia's earlier estimation that industry mobile device volumes would grow approximately 10% in 2008.
Nokia continues to target an increase in its market share in mobile devices in 2008.
http://tinyurl.com/6nu5d5
- Eric -
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