($NOK) Nokia’s Earnings Surprise in Fourth Quarter

Nokia Corp. (NOK), the largest mobile phone manufacturer of the world, declared fourth quarter 2009 financial results, with net income up 60% year-over-year. This is primarily due to increasing market share in the high-end high-margin smartphone market coupled with effective cost-cutting measures taken by management. During the reported quarter, Nokia sold four new touch-screen smartphones in addition to its existing three touch-screen smartphones.

Quarterly net income was approximately $1,305 million or 37 cents per share compared to a net income of $816 million or 22 cents per share in the prior-year quarter. Fourth quarter EPS of 37 cents was significantly higher than the Zacks Consensus Estimate of 29 cents. Quarterly total revenue of approximately $17,740 million was a decrease of 5% year-over-year. However, fourth quarter revenue was well above the Zacks Consensus Estimate of $16,193 million. The decline in year-over-year revenue is the result of a huge reduction in net sales of the company’s struggling telecom infrastructure development segment of Nokia Siemens Network, which is a 50-50 joint venture between Nokia and Siemens AG (SI).

Quarterly operating profit was approximately $1,689 million, up by a massive 132% year-over-year. Operating margin in the same quarter rose to 9.5% compared to a mere 3.9% in the year-ago quarter. During fiscal 2009, Nokia eliminated 2,276 jobs or 1.8% of its total workforce that helped the company achieve this solid performance.

Operating cash flow in the fourth quarter 2009 was approximately $2,220 million, which is more than double sequentially. At the end of fiscal 2009, the company had around $13.17 billion of cash and marketable securities compared with $10.89 billion of cash and marketable securities at the end of the previous quarter. At December 31, 2009, Nokia’s net debt-equity ratio was –25%, compared to -14% at December 31, 2008.

Devices & Services Segment

Quarterly revenue was approximately $10.11 billion, up 0.5% year-over-year. This segment continues to generate the bulk (68%) of the total revenue. In the reported quarter, Average selling price (ASP) in the fourth quarter was around $93.2 compared to $105.8 in the year-ago quarter and $91.2 in the previous quarter. Gross margin was 34.3% compared to 33.8% in the same quarter of the previous year. Operating margin was15.4% compared to 12.1% in the year-ago quarter.

In the fourth quarter, Nokia shipped 126.9 million mobile handsets, up 12% year-over-year and also up 17% sequentially. In the same quarter, the company shipped 20.8 million smartphones, up 37.8% year-over-year. Nokia’s global market share in the overall mobile handset market was 39% in the fourth quarter 2009, compared to 37% in the year-ago quarter and 38% in the previous quarter. In the smartphone market, Nokia’s global market share was 40% in the reported quarter compared to 35% in the prior-year quarter. Nokia remains the market leader in Europe, Middle East & Africa and Asia-Pacific regions. However, the company lagged significantly behind both Research In Motion (RIMM) and Apple Inc (AAPL) in the lucrative North-American markets.

Nokia Siemens Network Segment

Quarterly revenue was approximately $5.33 billion, down 16% year-over-year. Gross margin was 30.6% compared to 30.4% in the same quarter of the previous year. Operating profit was around $25.2 million compared to an operating loss of around $265 million in the prior-year quarter.

NAVTEQ Segment

Quarterly revenue was approximately $333 million, up 10% year-over-year. Gross margin was 87.1% compared to 87.9% in the same quarter of the previous year. Operating loss was around $83 million compared to an operating loss of around $108 million in the prior-year quarter.

Future Outlook by Management

Nokia is expecting that its first quarter 2010 revenue for the Devices & Services segment will be within the range of approximately $9,522 million – $10,250 million. First quarter 2010 revenue for the Nokia Siemens Network is approximated within the range of $3,800 million – $4,250 million. For full fiscal 2010, the global mobile handset market would go up by 10%. Nokia is expecting to maintain its current market share for mobile handsets.

Zacks Investment Research

About vitalstocks

This is a sample profile field. Vitalstocks is the operating company for Stockbloghub. This will place the picture of the author or company in the profile. Here is another extra line of information.

Comments

Powered by Facebook Comments


Similar Posts: | | | | | | | | | | Communication Equipment | Technology

RSS feeds: AAPL | American Strategic Income Portfolio Inc | Apple Inc. | ASP | NOK | Nokia Corporation | Research In Motion Limited | RIMM | SI | Siemens AG | Communication Equipment | Technology |

Other Posts by | RSS Feed for this author