Nokia Corp. (NOK), the largest mobile phone manufacturer of the world, declared its fourth-quarter 2011 financial result where both the top and bottom line beats the Zacks Consensus Estimate.

Quarterly net revenue was approximately $13,496.7 million, down 21% year over year but was above the Zacks Consensus Estimate of $13,407 million. Quarterly net loss was approximately $1286.9 million or a loss of 39 cents per share compared with a net income of $1,192.5 million or 27 cents per share in the prior-year quarter. However, adjusted (excluding special items) EPS of 8 cents in the reported quarter beat the Zacks Consensus Estimate a couple of cents.

Quarterly adjusted operating income was approximately $644.8 million, down 56% year over year. Adjusted operating margin in the fourth quarter was 4.8% compared with 8.6% in the year-ago quarter. Operating cash flow in the reported quarter was $868.8 million, down 74% year over year.

At the end of the fourth quarter of 2011, the company had $7.52 billion in net cash and marketable securities compared with $9.43 billion at the end of fiscal 2010.

Devices & Services Segment

Quarterly revenue was approximately $8,090 million, down 29% year over year. Within this segment, smartdevices (including smartphones and tablets) revenue was $3,705.7 million, down 38% year over year. Mobile Phone revenue was $4,101 million, down 23% year over year. Smartdevices average selling price (ASP) was $188.9, down 9% year over year. Mobile Phone ASP was $43.2, down 24% year over year. In the fourth quarter of 2011, Nokia shipped 19.6 million smartdevices and 93.9 million Mobile Phones, down 31% and 1% year over year, respectively.

Nokia Siemens Network Segment

Quarterly revenue was approximately $5,146.4 million, up 15% year over year. Quarterly adjusted operating profit was approximately $237.4 million, up 21% from the prior-year quarter. Adjusted operating margin was 4.6% compared with 3.7% in the prior-year quarter.

Location & Commerce Segment

Quarterly revenue was approximately $412.8 million, down 4% year over year. Quarterly adjusted operating profit was $39.1 million, up 200% year over year. Adjusted operating margin was 9.5% compared with a negative operating margin of 10.9% in the year-ago quarter.

Future outlook

For the first quarter of 2012, Nokia expects to report break even operating margin for its non-IFRS Devices & Services, ranging approximately 2 percentage points. Nokia further expects to reduce the operating expense in this segment by more than EUR1 billion by 2013 from the 2010 level of EUR5.35 billion.

Recommendation

Continuous loss of market share coupled with stiff competition from Google Inc‘s (GOOG) Android-based smartphones and Apple Inc‘s (AAPL) iPhones are headwinds for the company. Furthermore, delay in the launch of Windows Phone 7 based smartphones may act as negative catalysts for the stock in 2011.

However, increased shipments of Nokia’s dual-sim handsets in the emerging nations as well as aggressive cost reduction steps implemented by the company are positives.

We maintain our long-term Neutral recommendation for Nokia. Currently, Nokia has a Zacks#4 Rank, implying a short-term Sell rating on the stock.

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