Monday, June 2, 2014

What to Look For With the Nokia Corporation (NOK) Earnings Report

On Thursday, all eyes will be on Nokia Corporation (NYSE: NOK) which is scheduled to report earnings at approximately 1:00 PM (CET+1). We should mention that we have the stock in our SmallCap Network Elite Opportunity (SCN EO) portfolio because there is evidence the company is gaining some traction through launch of new mobile devices with Window's new mobile OS while the charts have been giving off mixed signals for investors and traders alike. With that in mind, here is a quick wrap-up of what to expect or look for from Nokia on Thursday:

Earnings Expectations: Some Hard Numbers. Forbes has a good summary of what Wall Street expects from Nokia, which is for revenue to fall 10% year-over-year to $8 billion for the quarter (verses $9 billion a year ago) and for a loss of three cents per share verses a loss of 10 cents per share. The Wall Street Consensus is unchanged over the past month, but it has fallen from three months ago when the consensus called for a loss of one cent. Zacks also noted that Nokia delivered a 33.33% positive earnings surprise. Smartphone Volume Expectations. Besides top and bottom line numbers, Wall Street will be looking closely as Nokia's smartphone volume figures. Another Forbes article noted that the smartphone volume for the March quarter came in at 6.1 million units with a normal seasonal decline from 4Q12 level of 6.6 million units. However, it was noted that Wall Street wants to see 8 million smartphones shipped during the June quarter. Smartphone Pricing. In addition, Wall Street will want to see how the Lumia 520 ramp-up during the quarter is either impacting or where its taking smartphone average sales prices (ASPs). The last Forbes article I noted mentioned that Nokia's ongoing smartphone mix shift is making it difficult to interpret where ASPs are heading and there might be sizable surprises. Is There Enough Cash For a Turnaround Plan to Succeed? Last week, a Reuters' article noted that Wall Street will be scrutinizing Nokia's second-quarter results to see whether the company has enough cash to stick with a turnaround plan that was supposed to take two years, but is now into its third. Apparently, Nokia has already given an estimate for its net cash position at the end of the second quarter which was between 3.7 billion euros ($4.8 billion) and 4.2 billion. This suggests the company burned through between 300 million euros and 800 million in the quarter with an amount in the upper part of that range bound to worry Wall Street. The New Nokia Lumia 1020. Potentially a game changer or a nail in the coffin, the just launched Nokia Lumia 1020 phone is filled with innovations designed to provide sharp images. The phone's 41-megapixel sensor and image-stabilizing technology are both rare in smartphones – meaning you should get less blurry shots at night or indoors. In addition, the Lumia 1020 can also zoom in to an image and pick up details missed by the holder's eye. The Lumia 1020 will be available in the US on July 26 with advance orders starting on July 16. In addition, the phone will become available to China and Europe by September. Share Performance. On Tuesday, Nokia fell 2.91% to $4 a share plus the stock is up 12.36% since we added it to our SmallCap Network Elite Opportunity (SCN EO) portfolio earlier this year, up 5% since the start of the year, up 117.4% over the past year and down 84.6% over the past five years:

Here is the latest technical chart for Nokia with trend lines giving off mixed signals:

With all of the above in mind, investors and traders alike need to be pay close attention to the upcoming Nokia earnings report.

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.

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