Shares of Nokia (NOK) are up 33 cents, or 5.3%, at $6.45, still holding some gains from this morning’s better-than-expected Q3 report.
Of course, today’s report was just a prelude to the real event, which is next week, when the company is expected to show off new phones running Microsoft’s (MSFT) Windows at an even in London.
Mark Sue, RBC Capital Markets: Reiterates an Outperform rating and a $9 price target. Sue raised his Q4 revenue estimate to �9.7 billion from �8.9 billion, on sales of 114 million mobile devices. He cut his EPS estimate, however, to break-even from a penny per share, on declining selling prices. If Nokia can ship 1 million units running Windows this quarter, Sue writes, it would be considered a success. “Near-term, people seem to be embracing the dual SIM devices (18M units) and the rate of decline in traditional Symbian seems to be slowing, although some of it is related to price stimulation. Nokia is benefiting from a halo effect in India where buzz around dual SIM devices is carrying over to other low cost devices. ” As for valuation, “CY12 EPS variability remains high and at this stage we think investors may resort to an EV/Sales multiple rather than PE to value to the stock considering how early we are in the reboot cycle.”
Charlie Wolf, Needham & Co.: Maintains a Hold rating on Nokia shares. He cut his 2012 EPS estimate to �0.40 per share from a prior �0.45 per share on declining average selling prices. He notes sales were “especially weak in Europe,” though the company was able to stem share loss in India and China with new feature phone using “dual-SIM” configurations. Wolfe is focused on the “binary event,” the introduction of the Microsoft phones. “Nokia will begin to roll out smartphones running on the Windows Phone 7 operating system in the fourth quarter. However, Stephen Elop, the company��s CEO! , cautio ned that it would be a country-by-country launch. Therefore, it could take a number of quarters before we can assess the success of this venture.”
Pierre Ferragu, Sanford Bernstein: Reiterates an Underperform rating and a $4.29 price target on the shares. The strong shipments of dual-SIM phones in emerging markets were widely expected. And he’s not impressed: “We take a view opposite to today��s market reaction and read further weaknesses in the quarter, the latter being in essence well in line with our expectations.” With mobile phone gross margin and average selling price declining in the quarter, these dual-SIM phones don’t seem to him to be helping the business fundamentals. ” The feature phone market is now likely to shrink rapidly in value, and as Nokia will not ship an additional 18m ��catch up batch�� of Dual SIM phones every quarter, it is reasonable to expect a pronounced structural decline in Mobile Phone sales and profits in the very near future, most likely as early as next quarter, if adjusted for seasonality. “
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