Nokia Corp. (NOK), the largest mobile phone manufacturer of the world, declared first quarter 2010 financial results. Quarterly net revenue was approximately $12,817 million, up 3% year-over-year but significantly below the Zacks Consensus Estimate of $13,511 million. This was primarily due to lower than expected mobile devices sales.
Quarterly net income was approximately $470 million or 12 cents per share compared to a net income of $164 million or 4 cents per share in the prior-year quarter. However, first quarter 2010 adjusted (excluding special items) EPS 19 cents was slightly below the Zacks Consensus Estimate of 20 cents.
Quarterly operating profit was approximately $657 million, up by a massive 787% year-over-year. Operating margin in the same quarter rose to 8.6% compared to a mere 5.5% in the year-ago quarter. Operating cash flow in the reported quarter was approximately $1,346 million, which more than tripled year-over-year.
At the end of the first quarter 2010, the company had around $13.06 billion of cash and marketable securities, compared with $10.9 billion of cash and marketable securities at the end of the prior-year quarter. At March 31, 2010, Nokia’s net debt-equity ratio was –31%, compared to -14% at March 31, 2009.
Devices & Services Segment
Quarterly revenue was approximately $8.97 billion, up 8% year-over-year. This segment continues to generate the bulk (70%) of total revenue. In the reported quarter, average selling price (ASP) was around $83.5 compared to $88.8 in the year-ago quarter and $86.1 in the previous quarter. Gross margin was 32.4% compared to 33.8% in the same quarter of the previous year. Operating margin was12.5% compared to 8.9% in the year-ago quarter.
In the first quarter 2010, Nokia shipped a total 107.8 million mobile handsets, up 16% year-over-year but down 15% sequentially. In the same quarter, the company shipped 21.5 million smartphones, up 57% year-over-year and also up 3% sequentially. Nokia’s global market share in overall mobile handset market was 33% in the first quarter 2010, compared to 32% in the year-ago quarter and 35% in the previous quarter. In the smartphone market, Nokia’s global market share was 41% in the reported quarter compared to 38% in the prior-year quarter and 40% in the previous quarter.
Nokia Siemens Network Segment
Quarterly revenue was approximately $3.66 billion, down 9% year-over-year. Gross margin was 28.8% compared to 23.5% in the same quarter of the previous year. Operating loss was around $304 million compared to an operating loss of around $486 million in the prior-year quarter.
NAVTEQ Segment
Quarterly revenue was approximately $254 million, up 41% year-over-year. Gross margin was 84.7% compared to 87.1% in the same quarter of the previous year. Operating loss was around $104 million compared to an operating loss of around $162 million in the prior-year quarter.
Future Industry Outlook
Nokia is expecting that its second quarter 2010 revenue for the Devices & Services segment will be within the range of approximately $9 billion – $9.7 billion. Nokia now expects an operating margin of 11%-13% in its core Devices and Services segment in full fiscal 2010, down from previous expectations for 12%-14%. For full fiscal 2010, global mobile handset market to up by 10%. Nokia is expecting to maintain its current market share for mobile handset.
Second quarter 2010 revenue for the Nokia Siemens Network is approximated within the range of $4.2 billion – $4.58 billion. Operating margin in full fiscal 2010 is likely to be 0% – 2%. Nokia expects to accelerate growth of this segment in 2010.
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