S&P takes cautious view on Nokia

S&P takes cautious view on Nokia

Investment analyst Standard & Poor's (S&P) equity research division is urging caution on Nokia shares, ahead of its quarterly results this week.

Despite predicting that Nokia’s results will be in line or even slightly ahead of expectations, S&P Equity Research is recommending investors maintain a holding position on Nokia shares.

In a report by research analyst Jason Willey, S&P cites concerns about Q4 pressures on Nokia and its lack of a flagship handset to drive sales.

S&P forecasts Nokia’s devices and services results for Q3 this year will be down 40 base points quarter on quarter to 11.08%, ahead of predictions at 11%. S&P says this reflects ‘our belief that a more favourable product mix (N97, 5800) and efficiency efforts are being underappreciated.’

However S&P warns that despite predicted industry growth on the back of an improving economy ‘our enthusiasm as it relates to Nokia's shares is tempered by concerns about Q4 margin pressures and lack of a flagship high-end model or application ecosystem to support market share in this key segment.’

Willey told Mobile the company was 'headed in the right direction' but would have to continue its cost cutting regime, instigated at the end of last year, into Q4. 'It is important for them, particularly as the started later than some rivals,' he added.

Willey said Nokia must increase its focus on applications and software and move away from its 'manufacturer-centric view.' He added: 'That is the key - moving up the development curve to produce innovative products and not lagging behind.'

Its 2008 results reported in January this year saw its net income fall to £543.2m from £1.73bn in 2007. Revenue also plunged 20 per cent to £11.9bn.

Written by Mobile Today
Mobile Today


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