Seeking Alpha

Nokia dives as investors worry about NSN; Alcatel, Ericsson also off

  • The reaction to Nokia's (NOK -9.4%) Q4 report is very different from the one that followed its Q3 report, as investors worry about a 22% Y/Y drop in NSN sales (follows a 26% drop in Q3) and a 320 bps Y/Y drop in the division's op. margin to 11.2%. Excluding divestments/contract exits, sales fell 15%.
  • NSN's mobile infrastructure sales were relatively healthy, dropping 12% Y/Y to €1.56B after falling 26% in Q3. But its services sales fell 22% to €1.54B, nearly on par with Q3's 23% drop.
  • NSN's sales fell 21% in Europe, 13% in the Middle East & Africa, 23% in Asia-Pac, 38% in North America, and 35% in Latin America. They managed to rise 2% in Greater China (lifted by 4G buildouts).
  • Also: The Here division (mapping/location services) saw a 9% Y/Y sales drop to €254M, and the Advanced Technologies unit (patent licensing/R&D) saw its sales fall 20% to €121M. However, Nokia predicts the business, which could have more negotiating leverage following the Microsoft deal, will produce €600M/year in sales.
  • Mobile infrastructure rivals Alcatel-Lucent (ALU -2.4%) and Ericsson (ERIC -1.9%) are following Nokia lower on a down day for equities. Ericsson reports on Jan. 30, and Alcatel on Feb. 6.
  • Nokia's Q4 results, details/guidance
Comments (34)
  • dweebster
    , contributor
    Comments (308) | Send Message
     
    I take a longer view than today, with selling on a down market anyway. The global build-out of 4G infrastructure continues. NOK will get it's fair share. Meanwhile, management trims the company for better margins. Takes more time than 1 quarter of a major transition to demonstrate these fundamentals.
    23 Jan, 11:29 AM Reply Like
  • dwdallam
    , contributor
    Comments (6583) | Send Message
     
    DW

     

    I would agree, however, Nokia is dead money for the next 6 months. There simply was no guidance form Timo.
    23 Jan, 07:44 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    Ouch, Nokia!

     

    This hurts.

     

    I was expecting YoY profit growth outside of the devices division!
    23 Jan, 10:45 PM Reply Like
  • joshvegas
    , contributor
    Comments (268) | Send Message
     
    Forget Timo, what if some bad ass CEO is appointed? Look what happened to BBRY after Chen's appointment.
    24 Jan, 01:01 AM Reply Like
  • sidiji
    , contributor
    Comments (144) | Send Message
     
    and that's what we got, NSN profit yoy q4 up over 60%
    25 Jan, 10:27 AM Reply Like
  • Skylander2011
    , contributor
    Comments (439) | Send Message
     
    i guess ill dump the 9strike calls for feb while i still can get something for it:-)
    dont see the stock going up 2 buvks in a month...on what?...
    23 Jan, 11:30 AM Reply Like
  • Stock Market Mike
    , contributor
    Comments (1847) | Send Message
     
    I wouldn't bet on seeing $9 in 1H2014. $10 by 2015 is plausible, as that'd give them time to demonstrate solid execution, and possibly find a use for some of that cash. Many countries will also be well into their 4G/LTE buildouts, by then.
    23 Jan, 12:08 PM Reply Like
  • dwdallam
    , contributor
    Comments (6583) | Send Message
     
    In other words, Nokia is no DEAD MONEY!
    23 Jan, 07:44 PM Reply Like
  • Skylander2011
    , contributor
    Comments (439) | Send Message
     
    managed to recover few bucks from the sale earlier..as in no 9 bucks by tomorrow..all in all NOK is disappointing me atm...
    I think ill go with the 2015 suggestion of calls..gota figure out which price and which part of 2015..i don't want to sink any more $$...still playing with profits from last year ..but heck..i hate losing free $$..:)
    20 Feb, 09:27 PM Reply Like
  • Stock Market Mike
    , contributor
    Comments (1847) | Send Message
     
    You can always take the safe route. With their phones on track to be sold to Microsoft, you could leverage yourself and say "I doubt NOK will fall under $6. I'll buy those ITM $5/7 calls since their time value hardly decays."

     

    2015/2016 LEAP premium is not bad. NOK only has to rise 40-60 cents to break even, and I do think we'll see $8+ again within that time, easily.

     

    Another option to consider - there was a big spike for July $9 calls. I purchased a couple hundred lower strike ones on this dip back to $7, and will morph them into a bull call spread ($1 higher) if I see NOK rise over $8. That will give me a free bet that hopefully nets 20,000*$1 at expiry.

     

    -Mike
    21 Feb, 09:47 AM Reply Like
  • Timothy Bryan
    , contributor
    Comments (705) | Send Message
     
    the good side is that these low numbers for sales will make next years look really good :-)
    On the flip side I am down 50 K today!
    23 Jan, 12:04 PM Reply Like
  • dwdallam
    , contributor
    Comments (6583) | Send Message
     
    Dia,

     

    I'm looking now actively to move my assets to another equity or two. Nokia is dead 2014 as Timo has no clue and no guidance. Dead, dead, dead.
    23 Jan, 07:45 PM Reply Like
  • ted lujan
    , contributor
    Comments (515) | Send Message
     
    Long term, I am buying today @ $6.98 I consider it a buying opportunity. I like the volume on the stock. It seems to be forming a base around this price.
    23 Jan, 12:23 PM Reply Like
  • BlurredLines
    , contributor
    Comments (106) | Send Message
     
    Long term Nok is Dog.Once they deplete MSFT money we will see $4
    23 Jan, 12:41 PM Reply Like
  • dwdallam
    , contributor
    Comments (6583) | Send Message
     
    Based on today's announcement, with no forward looking anything, and Timo lost in Space, I'd agree.

     

    Just wow. It's still sinking in at how horrible Timo was. It's almost like he's given up.
    23 Jan, 07:47 PM Reply Like
  • Timothy Bryan
    , contributor
    Comments (705) | Send Message
     
    lol yep..
    23 Jan, 07:49 PM Reply Like
  • dwdallam
    , contributor
    Comments (6583) | Send Message
     
    TEd

     

    Shhhhhhh. Be vewy, vewy quite. We're hunting wabbits.
    25 Jan, 08:02 PM Reply Like
  • Skylander2011
    , contributor
    Comments (439) | Send Message
     
    doesn't he remind you of ketchup boy from BBRY? ...Heinz?...
    maybe they grow some balls to shuffle to top and hire some people with vision and get people buy on their outlook for the future..
    20 Feb, 09:30 PM Reply Like
  • Darrell
    , contributor
    Comments (257) | Send Message
     
    “The Here division (mapping/location services) saw a 9% Y/Y sales drop to €254M, and the Advanced Technologies unit (patent licensing/R&D) saw its sales fall 20% to €121M”

     

    I have been on record as stating that MS will buy the Nokia’s Here division and their Advanced Technologies unit. MS needs the technologies in order for them to remain competitive; I expect MS to buy these two divisions by the end of 2015, at the very latest.
    23 Jan, 12:44 PM Reply Like
  • Cindywu1018
    , contributor
    Comments (139) | Send Message
     
    This co. is" investable" because it has a lot assets to sell, although their service/product is not selling! Lol
    24 Jan, 05:35 AM Reply Like
  • manfredthree
    , contributor
    Comments (1425) | Send Message
     
    This was a simple "sell down to go" . We bought at 7 on the push. Nothing in the report tells us that NOK is not going according to plan.
    23 Jan, 01:07 PM Reply Like
  • dwdallam
    , contributor
    Comments (6583) | Send Message
     
    Man,

     

    I agree with that, but the plan is nothing at all, even Timo has said in his blubbering announcement that NSN is dead money for 2014.
    23 Jan, 07:48 PM Reply Like
  • Cindywu1018
    , contributor
    Comments (139) | Send Message
     
    Hope you push pps back to 8$ so I can get out...thank you!
    24 Jan, 05:42 AM Reply Like
  • dwdallam
    , contributor
    Comments (6583) | Send Message
     
    CIndy,

     

    I was thinking the same thing. lol
    25 Jan, 08:03 PM Reply Like
  • Kamminga
    , contributor
    Comments (186) | Send Message
     
    It's all humbug. These figures are promising if not downright good. Comparing fy 2013 with 2012 is yesterday's game. And MSFT is still getting a bargain.
    23 Jan, 01:12 PM Reply Like
  • BornIn87
    , contributor
    Comments (98) | Send Message
     
    Nokia has been overvalued since the announcement that MS bought the device division. It's still got room to fall.
    23 Jan, 01:55 PM Reply Like
  • hneumann
    , contributor
    Comments (560) | Send Message
     
    "It's still got room to fall."

     

    Room to rise also. Nokia is a topname to buy in 2014 at Merrill Lynch and last week upgraded at Zacks to buy rating. It's about the future my friend, not the past
    23 Jan, 03:22 PM Reply Like
  • dwdallam
    , contributor
    Comments (6583) | Send Message
     
    hneu

     

    After today's flubber, I doubt any investment banks are chomping at the bit to buy Nokia.
    23 Jan, 07:48 PM Reply Like
  • Cindywu1018
    , contributor
    Comments (139) | Send Message
     
    There is always a future for a 100 year old co. to grow - we need to find it out because the management didn't say yesterday! Lol (unfortunately, nok longs don't run the co.!)
    24 Jan, 05:40 AM Reply Like
  • dwdallam
    , contributor
    Comments (6583) | Send Message
     
    The problem is that I don't have 100 years to wait. I'm thinking most people don't. Long term investing is fine for the corporate business, not so much for a human who lives 80 years, then dies. I'm not building a continuing legacy of a dynasty built by my ancestors decades and even centuries ago; I'm trying to survive.
    25 Jan, 08:06 PM Reply Like
  • youcangetholdofjules
    , contributor
    Comments (2) | Send Message
     
    NSN is in for a couple of bumpy years I think, but, they have a couple of things going for them.

     

    They seem to be the most efficiently run of the major telco vendors, Ericsson and Huawei have the momentum, and A-Lu seems to be on the rebound, and starting to become more efficient, but NSN, from what I have read, are able to run their business better.

     

    Long term, I think they will be ok - the reason I say this is that I doubt ZTE will be in the mobile infrastructure business for terribly much longer. Their reputation for network builds is in tatters, and they simply haven't been paying their bills in some cases. Huawei too is starting to see something of a backlash in some markets, operators are seeing that once huawei have gotten their money, the level of support disappears off a cliff, and this has followed through in their managed services contracts as well, and this has been noticed clearly, and word has gotten around. They are the poster boy currently, but there is strong suspicion that their business is propped up by the Chinese government, I have seen first hand what their winning bid prices are and how NSN and Ericsson were in comparison on one recent bid in Oceania. Huawei came in 40% cheaper than the next highest bidder. The other two walked away, knowing that it was impossible to make money at that price.

     

    The factors working against all of them is the uncertainty regarding 5G, small cells, and Cisco entering the market with the purchase of Ubiqisys and Intucell. This gives Cisco a different strategy as Ubiquisys is small cell, and Intucell is SON, and if they can get these two working together, then Cisco is likely to become the biggest threat to everyone.
    26 Jan, 01:50 AM Reply Like
  • ted lujan
    , contributor
    Comments (515) | Send Message
     
    @ DW, Hey be nice.
    I am 82 and haven't kick the can yet!!
    26 Jan, 03:05 AM Reply Like
  • dwdallam
    , contributor
    Comments (6583) | Send Message
     
    Ted

     

    Well, at least you don't have another 30 years to worry :) You know, there is something in that, I guess.
    26 Jan, 11:04 PM Reply Like
  • sidiji
    , contributor
    Comments (144) | Send Message
     
    NSN is brilliantly profitable, but in final analysis its just a placeholder while nokia executes its IPR strategy as per this latest news:

     

    Friday, January 31, 2014
    Nokia wins fourth German patent lawsuit against HTC (third in only two months)

     

    http://bit.ly/Lice3m
    31 Jan, 02:11 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|