Nokia (NOK) is an attractive asset due to its low stock price and prominence overseas in emerging markets. It's having a successful transition in restructuring operations and may realize a significant resurgence on the back of its partnerships with major tech firms such as its Nokia Siemens Networks segment and its strong portfolio of patents like its mapping technology. Microsoft (MSFT), Sprint (S), AT&T (T), and Research in Motion (RIMM) are the firms worth consideration when reviewing Nokia's metrics. The resurgence of the Nokia brand in the near term will depend greatly on partnerships with Microsoft and AT&T. Whereas, Research in Motion and Sprint are in similar downtrodden or debt-laden situations as Nokia.
Nokia's 0.26 price-to-sales ratio is the lowest among the firms, and its price-to-book is around 1.03. Research in Motion's 0.48 price-to-book ratio is the lowest among the firms. Nokia's annualized dividend is around $0.26 per share. Nokia's sales have declined 1.2% over the past five years. Microsoft's and AT&T's sales have increased 12.1% and 7.9%, respectively, while Sprint's sales have declined 3.8%. Nokia's -$1.52 EPS is the lowest among the firms. It has declined 162.9% in 2012, but it is projected to increase 80.6% in 2013.
Nokia's -42.74% ROE, -11.5% operating margin and -15.9% profit margin are the lowest among the firms. Nokia's current ratio is around 1.28, and its debt-to-equity ratio is around 0.66. Sprint's 2.5 debt-to-equity ratio is the highest among the firms. Nokia's float short is around 7.7%, and its 5.5 short ratio is the highest among the firms. Nokia's beta is around 1.5, and its average volume is around 53.2 million and its relative volume is around 0.57. Nokia's stock is down 37.2% YTD, but it has increased around 6.8% over the past month. Its stock has decreased around 0.7% since its last earnings release.
On Nokia's recent earnings report, third quarter net sales totaled $9.26 billion, decreasing 4% sequentially and 19% YOY. Third quarter net cash from operating activities was negative $549.03 million, down from $130.5 million in the second quarter and $1.09 billion YOY. Nokia finished the third quarter with $9.8 billion in cash and cash equivalents, down from $10.78 billion YOY. Nokia expects the fourth quarter to be challenging as it benefits less than usual from seasonality increases in volume as it attempts to ramp up for a new device release. Nokia projects fourth quarter Devices & Services operating margin to be around -6% and Nokia Siemens Network operating margin to be around 8%, plus or minus 400 bps respectively.
Third quarter Devices & Services net sales totaled $4.55 billion, decreasing 11% sequentially and down 34% YOY. Smart Devices net sales totaled $1.24 billion, decreasing 37% sequentially and 56% YOY. Third quarter smart devices sales volume totaled 6.3 million units, decreasing 38% sequentially and 63% YOY. Third quarter operating margin for the Devices and Services segment was -19.2%, down from -11.8% sequentially and 3.1% YOY. Nokia Siemens Network net sales totaled $4.48 billion, increasing 5% sequentially and 3% YOY. Third quarter operating profit totaled $232.92 million, increasing from negative $290.51 million sequentially and negative $145.89 million YOY. Operating margin in this segment was 5.2%, increasing from -6.8% sequentially and -3.3% YOY.
Nokia Siemens Networks recently announced the launch of CEM for Liquid Net. This integrated platform optimizes performance and ROI by allowing operators to identify opportunities to capitalize on innovations from the consumer demand perspective opposed to the typical network supply vantage point. This data management software will be appealing as it allows operators to improve efficiency while maximizing returns based on the demands and experience of the consumer.
Nokia Siemens Networks cash balance improved for the fourth quarter in a row while achieving record profitability during third quarter 2012. Management noted strong third quarter sales from its new Asha full touch smartphones during the firm's smartphones & devices transitional period. Nokia continues to divest non-core assets like Vertu. Management noted that the firm is moving faster through its restructuring transition than initially anticipated. Nokia still has an industry leading patent portfolio. In the first half 2012 the firm filed the most patents it had in a 6 month period over the past 5 years. Nokia is currently the leading firm providing in-dash navigation to the automotive sector, and its mapping solution powers 80% of the vehicles with in-dash navigation.
Nokia noted that Windows 8 now touts 100,000 apps and exuded confidence in the Lumina 920's innovative features that will augment Microsoft's new mobile OS. Nokia plans the initial roll out of its Windows 8 Lumina 820 and 920 to occur in November. The firm and its partners are currently focused on improving sales and marketing to bolster the Lumina brand in retail and operators' stores. Nokia is focused on making a global impact with its smartphones and mobile phones in 2013. The Asha has been one of the top selling phones in India during different months.
Some analysts feel Europe will be a significant opportunity for Nokia. Over 50% of the European consumer market has yet to buy their first smartphone and this region is already familiar with the Nokia brand, and Windows OS recently surpassed 10% of the market in Italy. The major carriers like Verizon (VZ), Sprint and AT&T are interested in a third ecosystem to improve competition on both the supply and demand sides of the smartphone sector. Microsoft is favored over Research in Motion to fill this void. AT&T is already the exclusive carrier for the anticipated release of the Lumina 920 over the next few weeks. Verizon has also shown interest in carrying Nokia and Microsoft brand smartphones.
Investors bullish on Microsoft's Windows 8 mobile OS may consider Nokia as an opportune investment for capital appreciation available at a discount. Aside from the Microsoft partnership and demands from major wireless carriers for a competitive ecosystem, Nokia's prominence as a global brand in the eastern hemisphere, its success with Nokia Siemens Networks, and its mapping technology in the auto sector are reasons to be bullish on this stock's mid-term performance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.