Nokia 8

Nokia to Have Tough Q3 & Q4 is Big the Question: Pareto Securities

Pareto Securities Equity Research foresees a tough third quarter for Nokia Corporation (NYSE:NOK), while the expectations for fourth quarter remain a big question mark. According to the report, the recent announcement of Nokia’s two new smart phones Nokia Lumia 9  came short of expectations, and consequently, may not trigger any positive reaction based on the company’s stock performance.

Nokia to Have Tough Q3 & Q4 is Big the Question: Pareto Securities

Indeed, there was a lot of hype and expectations regarding the anxiously awaited Lumia phones by Nokia Corporation (NYSE:NOK), but as reported in our previous articles, nothing of value came out, and this consequently impacted the stock negatively, notes Helena Nordman-Knutson, analyst at Pareto Securities.

Additionally, the report notes that Ballmer’s comments that it would take some months before the complete features are availed, indicates that there is a lack of a full Supplier Development Kit (SDK), which further dims the future as to when the devices will be available for purchase. Consequently, this pulls the company behind others that will be announcing the schedule and pricing of their devices soon.

Apple Inc. (NASDAQ:AAPL) is set to make an announcement mid next week, while (NASDAQ:AMZN) already did that yesterday, revealing products that are set to rival other tablets from market participants.

The company also did indicate that the chances of issuing a profit warning next week, are limited. Therefore, this means that the probability has just gone down, but as we all know about probabilities, even a 1% chance can happen, at the expense of the 99%. This means that profit warning has not been ruled out completely and investors could yet receive a shocking benefit sooner than they would have hoped.

According to the above projections, the company is expected to record negative earnings per share for the next two years, with the only positive EPS coming in 2014, expected at only EUR o.20 per share. However, this is also unrealistic, going by the current trend, as the company continues to fall behind its major competitors, Apple and Samsung Electronics Ltd.

Additionally, the industry is also attracting other powerful players, Microsoft Corporation (NASDAQ:MSFT), its software partner, as well as the search engine giant, Google Inc. (NASDAQ:GOOG).

Pareto Securities, is of the opinion that such a profit warning could easily send the company’s stock to the bottom of  the abyss of technology stocks, given the current investor loss of confidence in the company. The Equity research firm says, “The company’s guidance for Q3 included a note that the company expects D&S EBIT ( non IFRS) to be at the level of Q2 or -9.1% “plus or minus four percentage points”. We have lowered our estimates to mirror a result at the lower end.”

Additionally, no guidance was given on sales projections for Q3, which also raises question marks over the companies projection for the two Nokia Lumia models, in the near term. Helena Nordman-Knutson, also adds, “We believe Q3 will be tough and Q4 is still in the clouds,” further expressing that the company’s stock still remains a good long-term prospect.

Nonetheless, Pareto Securities maintains a price target of  EUR 3.40 per share, and have a buy rating on the stock at EUR 1.99. The form claims that the stock will depend highly, on what iPhone 5 will bring to its customers, claiming that this will trigger a shift in Nokia Corporation (NYSE:NOK) stock either direction.



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