Nokia Corp. (NOK - Analyst Report) reported first-quarter 2014 financial results wherein the bottom line surpassed the Zacks Consensus Estimate, while the top line missed the same. Stiff competition from Apple Inc.’s (AAPL - Analyst Report) iPhones and Google Inc’s Android-based smartphones have compelled Nokia to sell its Device business to Microsoft Corp. (MSFT - Analyst Report) for $7.5 billion on Apr 25, 2014. Nokia currently has a Zacks Rank #1 (strong Buy).
Quarterly net income from continuing operations came in at approximately $152.3 million or 4 cents per share compared with a net loss of $359 million or 9 cents per share in the prior-year quarter. However, quarterly adjusted (excluding special items) earnings per share of 6 cents were better than the Zacks Consensus Estimate of 4 cents.
On the other hand, quarterly net revenue stood at approximately $3,688 million, a stiff year-over-year fall of 15% and also lagged the Zacks Consensus Estimate of $3,987 million.
Quarterly adjusted gross margin was 45.7% in first-quarter 2014 compared with 39.3% in the prior-year quarter. Adjusted operating margin, in the reported quarter, was 9.1% as against a negative 1% in the year-ago quarter.
At the end of the first quarter of 2014, Nokia had approximately $2,908 million of net cash and marketable securities compared with $3,185 million at the end of 2013.
Nokia Solutions and Networks Segment
Quarterly total revenue was approximately $3,223 million in first-quarter 2014, down 17% year over year. Quarterly adjusted operating profit was approximately $299 million, up 10% year over year. However, adjusted operating margin was 9.3% compared with 7% in the prior-year quarter.
Quarterly total revenue was approximately $290 million in first-quarter 2014, down 3% year over year. Quarterly adjusted operating profit stood at $138 million against a negative $7 million in the prior-year quarter. Adjusted operating margin was 4.8% against a negative 2.3% in the year-ago quarter.
Advanced Technology Segment
Quarterly total revenue was approximately $181 million in first-quarter 2014, up 7% year over year. Quarterly adjusted operating profit was approximately $119 million, up 18% year over year. Adjusted operating margin was 65.6% compared with 59.3% in the prior-year quarter.
For fiscal 2014, adjusted operating margin for the Nokia Solutions and Networks segment is likely to be in the higher-end of the 5%–10% range.
Capital Restructuring Program
Nokia has initiated a Euro 5.0 billion (approximately $6.9 billion) capital restructuring program. The company intends to initiate a Euro 1.25 billion share buy-back program and will pay a special dividend of Euro 0.26 per share totaling Euro 1 billion. The remaining Euro 2.75 billion will be utilized to reduce debt level.