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On Nov 5, we maintain our Neutral recommendation on Nokia Corporation (NOK - Analyst Report) following mixed third-quarter 2013 financial results. While the bottom line has surpassed the Zacks Consensus Estimate, the top line missed the same.

Why the Reiteration?

In the third quarter of 2013, Nokia performed disappointingly in most categories. Sales in all the three segments of the company declined year over year followed by falling average selling price (ASP) of Nokia’s smart devices and reduced Mobile Phones sales.

Despite such decline in handset sales, Nokia’s Lumia flagship device business started witnessing rising demand with 40% year-over-year rise in shipments. Recently, the company launched Lumia 2520 – a tablet based on Microsoft Corp.’s latest Windows RT 8.1 platform. Nokia is gearing up for the upcoming holiday season with the launch of its latest tablet and two new 6 inch smartphones, Lumia 1320 and 1520.

The company also launched reasonably priced Nokia 207 and 208 phones for Internet savvy customers. The phone has already received strong responses in China, India and Nigeria. In the reported quarter, the company achieved operating profitability for the fifth time consecutively. Furthermore, Nokia decided to expand its Here Drive+ and Here Transit mapping application to all smartphones running on Microsoft Corporation’s Windows Phone 8 platform.

A huge patent portfolio coupled with the cost cutting measures implemented by the company will not only drive its margins but will also boost cash flows in the upcoming quarters.

Currently, Nokia has a Zacks Rank #2 (Buy).

Other Stocks to Consider

Other stocks in this industry that warrant a look include ShoreTel, Inc. (SHOR - Snapshot Report), Qualcomm Inc. (QCOM - Analyst Report) and Novatel Wireless Inc. (NVTL - Analyst Report). Both Qualcomm and Novatel currently carry a Zacks Rank #2 (Buy) while ShoreTel has a Zacks Rank #1 (Strong Buy).

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