Nokia Corp. (NOK) reported its fourth quarter 2014 results where both its top and bottom line surpassed the Zacks Consensus Estimate.
Quarterly net income was approximately $248 million or 6 cents per share compared with a net income of $402.4 million or 8 cents per share in the prior-year quarter. However, quarterly adjusted (excluding special items) earnings per share of 10 cents were better than the Zacks Consensus Estimate of 6 cents. On the other hand, quarterly net revenue was approximately $4,710 million, a stiff year-over-year fall of 21% and well below the Zacks Consensus Estimate of $6,978 million.
Quarterly adjusted gross margin was 42.5% compared with 41% in the prior-year quarter. Adjusted operating margin, in the reported quarter, was 11.7% as against 15.2% in the year-ago quarter. At the end of the fourth quarter of 2013, Nokia had approximately $3,128.7 million of cash and marketable securities compared with $5,907.8 million at the end of 2012.
Nokia Solutions and Networks Segment
Quarterly total revenue was approximately $4,207.3 million, down 22% year over year. Quarterly adjusted operating profit was approximately $472.9 million, down 39% year over year. However, adjusted operating margin was 7.8% compared with 6.3% in the prior-year quarter.
HERE Segment
Quarterly total revenue was approximately $344.2 million, down 9% year over year. Quarterly adjusted operating profit was $33.9 million compared with $54.2 million in the prior-year quarter. Adjusted operating margin was 7.1% compared with a negative 20.1% in the year-ago quarter.
Advanced Technology Segment
Quarterly total revenue was approximately $164 million, down 20% year over year. Quarterly adjusted operating profit was approximately $111.1 million, down 18% year over year. However, adjusted operating margin was 67.8% compared with 66.2% in the prior-year quarter.
Outlook
For fiscal 2014, adjusted operating margin for the Nokia Solutions and Networks segment will be in the higher-end range of 5% to 10% while for the first quarter of 2014 the segment is expected to be in the range of 5% plus or minus 4%.
Our Take
Stiff competition from Apple Inc.’s (AAPL) iPhones and Google Inc’s (GOOG) Android-based smartphones have forced Nokia to sell its Device business to Microsoft Corp. (MSFT) for $7.2 billion. The deal is expected to close by the end of the first quarter of 2014. As a result, Nokia has reported its handset business as discontinued operation in the fourth quarter of 2013.
Nokia currently has a Zacks Rank #2 (Buy).
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