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Will Top-Line Decline Affect Nokia's (NOK) Q1 Earnings?
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Nokia Corporation (NOK - Free Report) is set to release its first-quarter 2024 results on Apr 18, before the opening bell. In the last reported quarter, it reported adjusted earnings of 11 cents per share.
The company is expected to witness a revenue contraction year over year, owing to demand softness in several business segments. Fierce competition, macroeconomic challenges and inventory corrections are headwinds. However, efforts to bolster the position in the 5G ecosystem with a strong emphasis on innovation and portfolio expansion are positive. Licensing deals with major smartphone manufacturers is a tailwind.
Factors at Play
In the first quarter, Nokia inked a patent cross-license agreement with Honor for an undisclosed amount. It has also signed a multi-year patent cross-license agreement with smartphone maker Vivo. Per the deal, Vivo is required to make royalty payments to Nokia on mutually agreed terms. The deal is likely to terminate all pending patent litigations between the two companies. These developments are likely to have had a favorable effect on the company’s first-quarter performance.
During the quarter, Balitower, the Indonesia-based telecommunication company, has opted to deploy Nokia’s IP edge routing platform and applications to upgrade network infrastructure, boost operational efficiency and enhance network capacity. Citymesh, a Belgium-based operator, has selected Nokia Core Software as a Service (SaaS) to launch nationwide B2B mobile services.
In collaboration with Zayo, Nokia has successfully completed a groundbreaking live field trial, achieving a North American transmission record of 800Gb/s over a single wavelength across an 1866-kilometer (km) link from Los Angeles to El Paso, TX. These are likely to have supported the top line in the first quarter.
In the quarter under review, Nokia joined forces with Intel Corporation to optimize energy consumption in 5G networks. Nokia and Dell have solidified their partnership to revolutionize open network architectures within the telecom ecosystem. This collaboration aims to leverage the strengths of both companies to enhance private 5G use cases and streamline infrastructure solutions.
Nokia also introduced a cutting-edge in-wall Optical Network Terminal, marking a significant stride in enterprise optical LAN connectivity. This innovative product promises gigabit speeds, ensuring a robust, rapid, and secure broadband connection within diverse enterprise settings. These are likely to be reflected in the upcoming results.
However, constrained spending behavior from operators, owing to macroeconomic uncertainty, remains an overhang. Intensifying competition in the mobile networks business is creating near-term pressure for the company. AT&T’s decision to replace Nokia with a single vendor in the form of Ericsson is expected to have a negative impact on net sales. Normalization of 5G deployments in India is another headwind.
Our estimate for revenues from the Mobile Networks vertical is pegged at €1.87 billion ($2.03 billion), suggesting a 26.8% year-over-year decline. For the Network Infrastructure segment, our estimate for revenues is pegged at €1.88 billion ($2.04 billion), implying a 16.3% year-over-year decline. Revenues from Cloud & Network Services are estimated at €719.3 million ($780.9 million).
For the March Quarter, the Zacks Consensus Estimate for the company’s total revenues is pegged at $5.19 billion, indicating a decrease from $6.29 billion reported in the prior-year quarter. Adjusted earnings per share are pegged at 6 cents, matching the tally recorded in the prior-year quarter.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Nokia this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at 6 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
The Earnings ESP for NVIDIA Corporation (NVDA - Free Report) is +0.48% and it sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on May 22.
The Earnings ESP for Taiwan Semiconductor (TSM - Free Report) is +1.29% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Apr 18.
Image: Bigstock
Will Top-Line Decline Affect Nokia's (NOK) Q1 Earnings?
Nokia Corporation (NOK - Free Report) is set to release its first-quarter 2024 results on Apr 18, before the opening bell. In the last reported quarter, it reported adjusted earnings of 11 cents per share.
The company is expected to witness a revenue contraction year over year, owing to demand softness in several business segments. Fierce competition, macroeconomic challenges and inventory corrections are headwinds. However, efforts to bolster the position in the 5G ecosystem with a strong emphasis on innovation and portfolio expansion are positive. Licensing deals with major smartphone manufacturers is a tailwind.
Factors at Play
In the first quarter, Nokia inked a patent cross-license agreement with Honor for an undisclosed amount. It has also signed a multi-year patent cross-license agreement with smartphone maker Vivo. Per the deal, Vivo is required to make royalty payments to Nokia on mutually agreed terms. The deal is likely to terminate all pending patent litigations between the two companies. These developments are likely to have had a favorable effect on the company’s first-quarter performance.
During the quarter, Balitower, the Indonesia-based telecommunication company, has opted to deploy Nokia’s IP edge routing platform and applications to upgrade network infrastructure, boost operational efficiency and enhance network capacity. Citymesh, a Belgium-based operator, has selected Nokia Core Software as a Service (SaaS) to launch nationwide B2B mobile services.
In collaboration with Zayo, Nokia has successfully completed a groundbreaking live field trial, achieving a North American transmission record of 800Gb/s over a single wavelength across an 1866-kilometer (km) link from Los Angeles to El Paso, TX. These are likely to have supported the top line in the first quarter.
In the quarter under review, Nokia joined forces with Intel Corporation to optimize energy consumption in 5G networks. Nokia and Dell have solidified their partnership to revolutionize open network architectures within the telecom ecosystem. This collaboration aims to leverage the strengths of both companies to enhance private 5G use cases and streamline infrastructure solutions.
Nokia also introduced a cutting-edge in-wall Optical Network Terminal, marking a significant stride in enterprise optical LAN connectivity. This innovative product promises gigabit speeds, ensuring a robust, rapid, and secure broadband connection within diverse enterprise settings. These are likely to be reflected in the upcoming results.
However, constrained spending behavior from operators, owing to macroeconomic uncertainty, remains an overhang. Intensifying competition in the mobile networks business is creating near-term pressure for the company. AT&T’s decision to replace Nokia with a single vendor in the form of Ericsson is expected to have a negative impact on net sales. Normalization of 5G deployments in India is another headwind.
Our estimate for revenues from the Mobile Networks vertical is pegged at €1.87 billion ($2.03 billion), suggesting a 26.8% year-over-year decline. For the Network Infrastructure segment, our estimate for revenues is pegged at €1.88 billion ($2.04 billion), implying a 16.3% year-over-year decline. Revenues from Cloud & Network Services are estimated at €719.3 million ($780.9 million).
For the March Quarter, the Zacks Consensus Estimate for the company’s total revenues is pegged at $5.19 billion, indicating a decrease from $6.29 billion reported in the prior-year quarter. Adjusted earnings per share are pegged at 6 cents, matching the tally recorded in the prior-year quarter.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Nokia this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at 6 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Nokia Corporation Price and EPS Surprise
Nokia Corporation price-eps-surprise | Nokia Corporation Quote
Zacks Rank: Nokia currently has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Meta Platforms (META - Free Report) is scheduled to report quarterly numbers on Apr 24. It has an Earnings ESP of +3.26% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for NVIDIA Corporation (NVDA - Free Report) is +0.48% and it sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on May 22.
The Earnings ESP for Taiwan Semiconductor (TSM - Free Report) is +1.29% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Apr 18.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: €1 = $1.08565 (period average from Jan 1, 2024, to Mar 31, 2024).