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By Paul Shea

Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) may no longer be a giant of the mobile world, but the company is still working on the infrastructure that makes mobile telecommunications possible. The firm is due to release an earnings report for the second quarter of 2014 on Thursday, July 24. The firm’s future looks reasonably bright, according to analysis from SEB Research.

Artem Beletski, who wrote the report, thinks that the current quarter will show that the Nokia Networks margin is safer than people think, and the company’s earnings will be boosted in the coming years. The analysis suggests that Nokia may have a tough time in 2014, but the company’s financials are looking a lot better in the longer term.

Nokia Margin Looks Safe

According to the report, “Networks margin to be down 60bps q-o-q to 8.6% versus consensus at7.7%. Comparison from Q1 is tough due to high software sales that we do not expect to have continued into Q2.” The difference between the analyst’s margin prediction and the consensus number is down to seasonality. “There has been historically 350bps margin increase q-o-q in Q2,″ according to the analysis.

Nokia does not yet have a stand-out business, though many analysts seem to think that the company’s Networks arm is most important going ahead. That business is expected to expand strongly over the next few years. The SEB analyst reckons that part of the business could grow its sales to more than $11 billion by 2015.

That’s not the only part of Nokia's business going ahead, however. The company’s patent business, which sits under the title “technologies,” is expected to "perform well over the coming years. We have upped our 2015-16 estimates by 9% as we now assume IPR income from Samsung (OTC:SSNLF) to be EUR 250m a year following an arbitration decision in 2015; our previous estimate was EUR 200m.”

Nokia Shares Refuse To Budge

Shares in Nokia have fared poorly since the firm broke its relationship with its device-making department. Since the start of the year, the company’s stock has lost more than 4% of its value. A certain amount of that fall may have to do with the decline that the company saw after exiting the gadget market, but worrying trends in the company’s now core Networks business may have also contributed to the loss in value.

Since it was announced that the company would part with its device segment, shares have increased by more than 75%, indicating a market that saw the company better able to position itself given that cash and the acquisition of the other half of Nokia-Siemens Network. The analyst who authored the SEB report, Artem Beletski, put a price target of 6.10 euro on the company’s shares, acknowledging the effect the company’s large dividend is likely to have on its market value.

Nokia is paying a dividend of 37 euro cents to every common share this quarter, a return that’s actually damaging the market cap of a company that doesn’t bring in all that much money anymore. Next week’s earnings report will show whether that situation is headed for a change anytime soon.

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Source: Nokia Shares Have Disappointed Since The Beginning Of 2014