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We expect the Finnish handset manufacturer, Nokia Corporation (NOK - Analyst Report) to beat expectations when it reports its first-quarter 2013 results before the opening bell on Apr 18, 2013.

Why a Likely Positive Surprise?

Our proven model shows that Nokia Corporation is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +66.67%. This is a meaningful and leading indicator of a likely positive earnings surprise.

Zacks #3 Rank (Hold): Nokia Corporation currently has a Zacks Rank #3. Note that the stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating the earnings. 

The combination of Nokia Corporation’s Zacks Rank #3 (Hold) and +66.67% ESP makes us confident of a positive earnings beat on Apr 18, 2013.

What is Driving the Better-Than-Expected Earnings?

Nokia Corporation is poised for a better performance as the company’s Lumia handset continues to improve and lead the Windows OS (operating system)-based smartphone market. Nokia’s flagship Lumia 920 currently dominates 14% of the market and has a slight lead over Lumia 800.The company has resolved its issues related to the unavailability of Lumia in retail stores, which has led to improved sales.

The other Lumia devices are also performing well and Nokia currently captures almost 80% of the Windows-based smartphone market. Recently, NOK offloaded some of its non-core assets as part of its restructuring measures that will enhance the company’s operational efficiency. However, BlackBerry, which has witnessed significant customer switch for its latest BB10-based smartphone, could contract Nokia’s growth.

Other Stocks to Consider

Other companies you may consider on the basis of our model, which have the right combination of elements to post an earnings beat this quarter are as follows:

Research in Motion Limited (BBRY - Analyst Report) currently has an Earnings ESP of +500.00% and holds a Zacks Rank #2 (Buy).

AT&T Inc. (T - Analyst Report) has an Earnings ESP of +4.76% and carries a Zacks Rank #2 (Buy).

CBS Corporation. (CBS - Analyst Report) currently has an Earnings ESP of +1.47% and holds a Zacks Rank #2 (Buy).

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