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EARNINGS POLL-Nokia seen hit by weak mobile sales, NSN slowdown

Monday, 28 Oct 2013 | 5:38 AM ET

* Q3 results due Oct. 29 at 1000 GMT

* Net sales seen down 18 pct, mobile devices down 41 pct

* NSN sales, margins seen falling

HELSINKI, Oct 28 (Reuters) - Nokia's third-quarter results are expected to underscore dire conditions which prompted the company to sell its handset business to Microsoft, with analysts forecasting an 18 percent fall in net sales, according to a Reuters poll. Analysts on average expect quarterly sales of regular mobile phones to have fallen 41 percent from a year earlier to 1.4 billion euros ($1.9 billion), with a pickup in Lumia smartphone sales failing to make up for weakness at the cheaper end of the handset market. Nokia's telecom equipment unit, Nokia Solutions and Networks (NSN), is also expected to report a fall in sales as a business turnaround of the past year loses momentum. On average, analysts forecast NSN's quarterly sales down 18 percent from a year earlier at 2.86 billion euros and core profit down 29 percent at 228 million euros. With benefits from cost cuts petering out and key client Softbank largely finished with rolling out its high-speed network, analysts said NSN faces a more weakness ahead. "We believe that the main risk to Nokia over the coming few quarters is in weaker performance from NSN ... NSN performance has been driven by cost cuts and very strong performance with Softbank in Japan and T-Mobile in the U.S., both high margin customers that embarked in aggressive networks build-outs," Nordea analyst Sami Sarkamies said. He recently downgraded the shares to "sell" from a previous "buy" rating. Nokia bought out Siemens' stake in NSN in a deal that closed in August. It is expected to complete the sale of its handset business in the first quarter of 2014, after which NSN is due to account for around 90 percent of the company's overall sales. J.P. Morgan, in a research note on Monday, said NSN's margin was likely to fall to 7.1 percent from 9.1 percent a year earlier. Figures are in millions of euros, except for EPS and dividend in euros.

Q3

No Yr Change Mean Median High Low ago % Prev.

Q

Net sales 5,920 5,922 6,318 5,485 31 7,239 -18.2 5,695 - Devices & 2,875 2,896 3,174 2,455 31 3,563 -19.3 2,724

Services

- - Smart 1,355 1,360 1,566 1,066 19 976 38.8 1,164

devices

- - Mobile 1,398 1,417 1,528 1,212 19 2,366 -40.9 1,405

devices

- Location & 234 235 275 212 31 265 -11.7 233

Commerce

- NSN 2,860 2,864 3,050 2,585 31 3,501 -18.3 2,781

NON-IFRS

Gross income 1,809 1,838 1,957 1,635 27 2,001 -9.6 1,908 Gross margin 30.6 30.7 32.5 27.6 27 27.6 10.9 33.5

(%)

EBIT 161 147 310 4.00 31 78.0 106.4 303 - Devices & -51.4 -46.0 28.0 -170 28 -263 80.5 -32.0

Services

- Location & 9.50 8.50 30.0 -3.00 28 37.0 -74.3 8.00

Commerce

- NSN 228 219 315 187 28 323 -29.4 328 Pretax Profit 82.8 88.5 194 -132 24 -17.0 n/a 243 Net result -13.9 0.00 147 -148 29 -263 94.7 7.00 EPS 0.00 0.00 0.04 -0.04 29 -0.07 100.0 n/a

IFRS

Gross income 1,812 1,839 1,912 1,655 14 1,991 -9.0 1,907 Gross margin 30.6 30.7 32.5 27.6 14 27.5 11.3 33.5

(%)

EBIT -24.0 -25.0 205 -184 21 -576 95.8 -115 - Devices & -86.9 -90.5 12.0 -231 18 -683 87.3 -33.0

Services

- Location & -66.8 -79.5 9.00 -100 18 -56.0 -19.3 -89.0

Commerce

- NSN 158 147 294 84.0 18 182 -13.2 8.00 Pretax profit -90.7 -88.5 120 -222 22 -671 86.5 -175 Net result -140 -130 52.0 -376 25 -969 85.6 -227 EPS -0.04 -0.03 0.01 -0.10 25 -0.26 84.6 -0.06 ASP 45.4 46.0 49.0 39.0 28 43.0 5.6 45.0 - Smart 162 161 189 141 23 155 4.5 157

devices

- Mobile 25.7 26.0 27.0 22.0 23 31.0 -17.1 26.0

devices

Shipments 62.8 63.0 73.0 56.0 28 82.9 -24.2 61.1 - Smart 8.50 9.00 10.0 6.00 22 6.30 34.9 7.40

devices

- Mobile 53.9 53.0 65.0 49.0 22 76.6 -29.6 53.7

devices

Net cash from -391 -348 -69.0 -799 6 -429 8.9 -196

operating activities

Net cash 2,964 3,221 3,746 1,925 3 3,564 -16.8 4,067

2013:Q 4

Mean Median High Low No Net sales 6,883 6,881 7,991 6,045 31 - Devices & 3,308 3,339 4,434 2,610 31

Services

- - Smart 1,641 1,652 1,890 1,295 19

devices

- - Mobile 1,512 1,476 1,770 1,343 19

devices

- Location & 255 251 311 181 31

Commerce

- NSN 3,379 3,365 3,784 3,075 31

NON-IFRS

Gross income 2,087 2,095 2,327 1,702 27 Gross margin 30.4 30.3 32.6 26.6 27

(%)

EBIT 334 341 609 36.0 30 - Devices & 22.5 27.0 241 -142 27

Services

- Location & 16.1 15.0 38.0 -29.0 27

Commerce

- NSN 334 326 485 228 27 Pretax Profit 247 265 475 -40.0 23 Net result 146 153 340 -153 28 EPS 0.03 0.04 0.09 -0.04 28

IFRS

Gross income 2,073 2,132 2,327 1,298 14 Gross margin 30.6 30.4 34.9 27.4 14

(%)

EBIT 157 147 391 -262 21 - Devices & -2.39 14.0 214 -303 18

Services

- Location & -66.5 -65.5 11.0 -147 18

Commerce

- NSN 272 262 489 128 18 Pretax profit 97.3 86.0 344 -316 22 Net result 1.44 21.0 207 -423 25 EPS 0.00 0.01 0.06 -0.11 25 ASP 47.8 47.5 55.0 43.0 26 - Smart 160 161 182 135 22

devices

- Mobile 25.9 26.0 30.0 22.0 22

devices

Shipments 68.9 68.0 93.0 61.0 26 - Smart 10.4 10.0 13.0 8.00 21

devices

- Mobile 56.9 57.0 63.0 50.0 21

devices

Net cash from 132 161 277 -192 6

operating activities

Net cash 2,660 2,739 4,225 1,456 11

2013

No Yr Change% Mean Median High Low ago Net sales 24,351 24,338 25,620 23,078 31 30,176 -19.3 - Devices & 11,794 11,874 12,981 10,677 31 15,686 -24.8

Services

- - Smart 5,324 5,473 5,710 4,820 19 5,446 -2.2

devices

- - Mobile 5,904 5,898 6,256 5,599 19 9,436 -37.4

devices

- Location & 938 939 1,024 847 31 1,103 -15.0

Commerce

- NSN 11,824 11,785 12,363 11,358 31 13,779 -14.2

NON-IFRS

Gross income 7,642 7,620 7,987 7,084 27 8,456 -9.6 Gross margin 31.4 31.4 32.4 29.9 27 28.0 12.1

(%)

EBIT 977 988 1,356 524 30 126 675.4 - Devices & -57.8 -53.0 118 -330 27 -703 91.8

Services

- Location & 27.6 26.0 57.0 -23.0 27 154 -82.1

Commerce

- NSN 1,085 1,083 1,269 974 27 778 39.5 Pretax Profit 643 677 893 202 23 -215 n/a Net result 92.6 99.0 481 -355 28 -648 n/a EPS 0.02 0.02 0.12 -0.10 28 -0.17 n/a

IFRS

Gross income 7,634 7,707 7,978 6,863 14 8,390 -9.0 Gross margin 31.4 31.5 32.3 29.9 14 27.8 12.9

(%)

EBIT 31.0 30.0 487 -529 22 -2,303 n/a - Devices & -272 -263 -77.0 -716 18 -1,100 75.3

Services

- Location & -264 -277 -133 -365 18 -301 12.3

Commerce

- NSN 340 314 529 179 18 -799 n/a Pretax profit -425 -423 -31.0 -970 22 -2,644 83.9 Net result -605 -601 240 -1,298 25 -3,106 80.5 EPS -0.16 -0.16 0.00 -0.35 25 -0.84 81.0 Dividend per 0.06 0.00 0.40 0.00 17 0.00 n/a

share

ASP 46.2 46.0 52.0 43.0 26 47.0 -1.7 - Smart 166 166 178 159 21 155 7.1

devices

- Mobile 26.7 27.0 28.0 25.0 20 31.0 -13.9

devices

Shipments 256 257 279 241 25 336 -23.8 - Smart 32.3 32.0 36.0 28.0 19 35.0 -7.7

devices

- Mobile 221 223 234 208 19 301 -26.6

devices

Net cash from -290 -315 537 -2,099 15 -354 18.1

operating activities

Net cash 2,660 2,739 4,225 1,456 11 4,360 -39.0

2014 No

Mean Median High Low Net sales 24,145 24,365 26,411 19,613 18 - Devices & 12,115 12,180 13,593 10,036 17

Services

- - Smart 6,699 6,960 7,820 5,241 12

devices

- - Mobile 4,764 4,566 5,822 4,127 12

devices

- Location & 989 971 1,150 859 17

Commerce

- NSN 11,344 11,773 12,448 5,641 17

NON-IFRS

Gross income 7,336 7,381 8,215 5,850 16 Gross margin 30.7 30.5 32.7 28.4 16

(%)

EBIT 1,106 1,148 1,892 -280 17 - Devices & 297 244 702 -154 14

Services

- Location & 71.5 63.0 148 24.0 14

Commerce

- NSN 800 963 1,174 -806 14 Pretax Profit 673 785 985 -579 13 Net result 406 377 804 -428 16 EPS 0.10 0.10 0.20 -0.11 16

IFRS

Gross income 7,396 7,427 8,441 5,850 7 Gross margin 30.7 30.5 33.0 28.4 7

(%)

EBIT 684 689 1,295 -280 12 - Devices & 255 180 697 -108 9

Services

- Location & -132 -120 66.0 -350 9

Commerce

- NSN 597 734 996 -806 9 Pretax profit 401 373 1,000 -579 12 Net result 102 9.00 657 -739 15 EPS 0.02 0.00 0.16 -0.18 15 Dividend per 0.01 0.00 0.06 0.00 9

share

ASP 50.6 51.0 56.0 43.0 16 - Smart 155 156 170 133 13

devices

- Mobile 24.9 25.0 27.0 23.0 13

devices

Shipments 241 240 290 209 16 - Smart 43.2 44.5 51.0 36.0 12

devices

- Mobile 192 188 225 166 12

devices

Net cash from 215 225 994 -1,180 9

operating activities

Net cash 2,824 3,445 4,740 1,170 5

2015

Mean Median High Low No Net sales 25,455 26,467 28,038 19,695 13 - Devices & 13,321 13,303 14,944 11,796 13

Services

- - Smart 8,403 8,423 9,452 7,623 8

devices

- - Mobile 3,970 3,737 5,252 3,057 8

devices

- Location & 1,059 1,041 1,195 885 13

Commerce

- NSN 11,341 12,185 12,759 5,697 13

NON-IFRS

Gross income 7,574 7,492 8,465 5,969 11 Gross margin 30.2 30.3 32.0 28.0 11

(%)

EBIT 1,330 1,360 2,250 115 12 - Devices & 622 594 1,200 11.0 11

Services

- Location & 109 100 231 48.0 11

Commerce

- NSN 771 947 1,175 -814 11 Pretax Profit 830 968 1,398 -181 8 Net result 597 711 1,034 -446 11 EPS 0.14 0.15 0.30 -0.11 11

IFRS

Gross income 7,790 8,191 8,966 5,969 7 Gross margin 31.1 30.8 33.7 29.0 7

(%)

EBIT 1,071 1,178 1,967 115 12 - Devices & 521 449 1,200 7.00 9

Services

- Location & -70.3 -69.0 137 -336 9

Commerce

- NSN 649 840 1,000 -814 9 Pretax profit 783 862 1,854 -233 12 Net result 463 488 1,288 -446 12 EPS 0.10 0.12 0.32 -0.11 12 Dividend per 0.04 0.00 0.15 0.00 9

share

0.04 0.00 0.15 0.00 9 ASP 54.9 56.0 61.0 46.0 10 - Smart 146 150 155 120 9

devices

- Mobile 23.4 23.0 25.0 21.0 9

devices

Shipments 241 234 290 200 11 - Smart 57.0 57.0 68.0 46.0 8

devices

- Mobile 178 171 235 133 8

devices

Net cash from 819 1,103 1,634 -914 6

operating activities

Net cash 3,362 3,112 5,676 1,549 4

Analysts from the following banks and brokerages contributed to this poll: Alandsbanken, ABG Sundal Collier, Arete Research, Baird, Barclays Capital, BMO Capital Markets, Canaccord Genuity, Carnegie, Danske Bank Markets, Evercore Partners, Exane BNP Paribas, Goldman Sachs, Grupo Santander, Handelsbanken Capital Markets, HSBC, Inderes, Jefferies & CO., JP Morgan, Kepler Cheuvreux, Natixis Securities, Nomura Securities, Nordea Markets, Oppenheimer & Co INC., RBC Capital Markets, Redeye, S&P Capital IQ Equity Research, Sanford Bernstein & CO, Scotia Capital, SEB Equity Research, Swedbank Markets and Sydbank.

Data for Reuters Nordics earnings polls compiled by Inquiry Financial. For more details on the data, please click on www.ConsensusEstimates.com. ($1 = 0.7250 euros)

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NOK
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