Nokia (NYSE:NOK) is down about 1.5% in the pre-market after reporting 4Q05 earnings (see overview). In a note to clients, Lehman Brothers analysts Tim Luke and Stuart Jeffrey commented on the results -- excerpted here:
This morning, Nokia reported solid 4Q05 results that were broadly in line with expectations, with revenue upside being offset by slightly softer operating margins. Revenues of EUR 10.3bn were higher than our EUR 10.1bn estimate on stronger unit growth with in line ASPs. Weaker gross margins in the three handset divisions were offset by opex reductions to result in reported EPS of EUR 0.25 versus our/consensus EUR 0.25 (our EUR 0.30 estimate included an estimated 0.05 gain on Telsim, that was not included in 4Q results).
Positive: Slightly stronger unit shipments, handset share +1% QoQ, networks sales and margins improved, opex reductions, handset market guide solid +10% in CY06.
Negative: ASPs and handset gross margins down sequentially once again, enterprise division weak.
Given broadly in line results, and guidance inferring normal seasonality, we see little reason for material changes to consensus estimates, with upside to unit shipments offset by weak ASP guidance and weaker phone gross margins. Overall, we continue to observe steady progress in Nokia's product portfolio and remain encouraged by the cash generation. At present our 2EW rating and price target remained unchanged. Current estimates are for EUR 0.92/$1.12 in CY06.
We'll publish the Nokia conference call transcript later on today -- just check back here.