Nokia Corporation (NOK) After Earnings: Where Do Investors Stand?

The latest earnings report from Nokia Corporation (NYSE: NOK) was a mixed bag for investors as there was some good news along with other news that wasn't so good or could even be considered bad. I should mention that we have Nokia in our SmallCap Network Elite Opportunity (SCN EO) portfolio and we are up over 12% since early May. Nevertheless, an investment here is not for the risk adverse. With that in mind, here is a quick rundown as to where investors stand after the Nokia earnings report:

The Latest Earnings Report: Good and Bad. The Nokia earnings report was a mixed bag for investors. For starters, Nokia shipped 7.4 million Lumia smartphones in the quarter for a 32% sequential rise, but that was fewer than the 8.1 million units analysts had expected according to a Reuters poll while sales of regular mobile phones were also weaker than expected at 53.7 million units verses expectations of 56.2 million units. Nokia's sales fell to 5.7 billion euros ($7.49 billion) from 7.5 billion euros for the same period last year, but cost cutting has helped the company to trim its net loss to 227 million euros verses a net loss of 1.41 billion euros a year earlier. However, sales of Lumia phones increased by 32% sequentially to 7.4 million handsets. Nokia's CEO Stephen Elop also said the mobile phones business unit started to demonstrate "some signs of recovery in the latter part of the second quarter following a difficult start to the year" and he added that the Lumia 520 has "enjoyed a strong start in markets like China, France, India, Thailand, the UK, the US and Vietnam." Finally, Nokia Siemens Networks, the network infrastructure company, was a clear bright spot as operating margins came in at 11.8%, well above the 5% the company had been expecting and much better than the negative 1.2% operating margins in the core handset division. Some Analysts Are Optimistic. Although Greger Johansson with research firm Redeye in Stockholm said he was worried about the rapid sales decline of the feature phones, noting that Nokia has to keep launching new Lumia models at a rapid pace to keep up client interest in the Windows phones, he also added that the company: 

Best Stocks To Buy For 2014

"…has a few more quarters to make it. They are now more or less breaking even, that's a good starting point. The company has to keep on releasing new, very attractive products to catch market share from Samsung and Apple. I think Nokia still does have pretty good chance of doing that."

Do Consumers Want an Third Mobile Platform? Needham & Co.'s Charlie Wolf would be among the bears as he called the Nokia earnings report "disappointing on virtually every dimension." He also added:

"Nokia's second quarter results raise the possibility that consumers are content with just two platforms. If so, this does not speak well for the Microsoft/Nokia duo going forward. It appears that the market is reaching the now-or-never moment for the Windows 8/Nokia duo. We expect Microsoft to throw enormous resources behind Windows 8 to prevent its demise. But with a single digit market share, the challenge will be enormous." 

At Least Its Not as Bad as BlackBerry. Things could be much worst though as while Nokia sold 7.4 million Lumia devices in the second quarter for the highest quarterly total since Nokia began making Windows Phones, that figure is more than the total number of BlackBerry devices sold in its most recently reported quarter. Specifically, 6.8 million BlackBerry devices were sold for the three months ended June 1. Share Performance. On Wednesday, Nokia rose 0.75% to $4.01 for a market cap of $15.02 billion. The stock is up 5.2% since the start of the year, up 134.5% over the past year and down 85.4% over the past five years for a rather ugly performance for long term investors:

Finally, here is the latest technical chart for Nokia:

Clearly, Nokia still has work to turn around the handset business and it might take a few more earnings reports for investors to get a clearer picture.

SmallCap Network Elite Opportunity (SCN EO) has an open position in NOK. To find out what other open positions SCN EO currently has, and to learn why so many traders and investors are relying on this premium subscription service, click here to find out more.