Nokia (NYSE:NOK) is scheduled to announce its quarterly earnings on April 18. Typically, the company announces its quarterly earnings between the 2nd and 3rd week of the following quarter. In the last few quarters, Nokia made a habit of letting investors take a peek at its earnings figures before the scheduled date. For example, in the last quarter, Nokia was scheduled to announce its earnings on January 24, even though it announced its earnings two weeks before that on January 10. The company might do this again.
During the last earnings release, the company painted a mixed picture in terms of future guidance. In Devices and Services segment, it expects an operating margin of -2.00% with an error rate of 4.00%, which means that the number can range between -6.00% and 2.00%. In the Nokia Siemens Networks, Nokia expects an operating margin of 3.00% with an error rate of 4.00%, which means that the company is looking at an operating margin between -1.00% and 7.00%. In Location & Commerce (recently renamed to HERE) Nokia's expected operating margin was expected to be "slightly negative" even though the company gave no specific numbers. Given these figures, the company's guidance in the last earnings call reflected either a breakeven or a small loss. Keep in mind that Nokia tends to beat its own estimates because the company's estimates are usually very conservative.
The analyst estimates for Nokia's last quarter and the full year range widely, but this doesn't surprise me as the company is still in the middle of transition and there are too many moving parts, which makes guessing a difficult game. For the quarter, analysts expect Nokia to post a loss between 2 cents per share and 11 cents per share. For the full year, the range is much wider than that, with some analysts expecting Nokia to post a loss of 23 cents per share while others estimating the company to post a profit of 25 cents per share.
In the previous quarter, Nokia posted stronger-than-expected results across the board. Nokia Siemens Networks performed impressively with an operating margin of 14.4%. The company was able to sell 6.6 million Lumias mostly due to new product launches and the holiday season in the western world. In this quarter, the Chinese New Year might have fueled some of Nokia's phone sales. I will be really curious to see the number of Lumias sold in China since the partnership between Nokia and China Mobile. In addition to fully subsidized Lumia 920, the company is also introducing cheaper models in the country where average income isn't as high as it is in the Western world. In India (the second biggest mobile phone market in the world), Nokia's cheaper models continue to sell in high numbers. Apart from the Asha models that are really popular in the country, low-end Lumia models such as Lumia 520 are also selling very well in India, even though these phones will contribute more to the figures of the next quarter than this one.
Apart from the phone sales, I am also interested to find out more details about the future of Nokia Siemens Networks. In a matter of weeks, Nokia and Siemens (SI) will have to make a decision about the direction this partnership is heading to. There is a chance that Siemens will sell its part of the company to either Nokia or a third party, which should make things interesting. Nokia Siemens Networks is the biggest portion and most profitable part of the company. If it wasn't for Nokia Siemens Networks, Nokia would not have been profitable in the last fiscal year, which is worrisome for a lot of investors and analysts who believe that Nokia's turnaround should be tied to the company's handsets rather than its "side businesses."
There are many people who are trading Nokia in the short term, and many investors are planning to hold or short the company until the day of the earnings announcement. Those investors would be well informed and well served to know that Nokia doesn't always wait until the scheduled date to announce its results. Even though I am long Nokia and I should be "upset" with those that are shorting the company, it is my duty as an objective writer to warn them of something that might hit them. Whether Nokia's results are good or bad, the results will create a lot of volatility for either shorts or longs and a lot of investors will get burned. If you are planning to buy/short/sell this company right before the earnings, you might as well do it right now because you might wake up some day with the news that the company has announced its earnings before the scheduled date and you lost a significant portion of your investment as a result of this unexpected development.
Disclosure: I am long NOK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.