Enthusiasm on Nokia Q3 result wanes once Wall Street opens

Expectations for Nokia ‘s (OMX: NOK1V, NYSE: NOK) Q3 2012 were very low and the report contained many positive surprises to analysts but apparently less to avid investors. The positives included strong sales of the now smartphone-defined Asha touch phones that helped push Mobile Phones segment sales up to 76.6 million units, non-IFRS operating profitability, record strong result from subsidiary Nokia Siemens Networks, many Location & Commerce licensing deals for Navteq; particularly from Automotive sector and continued monetizing of the strong patent portfolio.

Microsoft union is being questioned more and more. Without flopping first Lumia-line, Nokia would have had a good quarter. Those sales were down sequentially to just 2.9 million devices. Even Symbian devices are still clearly outperforming Lumias. Second generation Lumias that will be running Windows Phone 8 were billed as much more than just Windows phones. Nokia will try to find new ways to get more visibility for the Lumia line. Lumia 920 and Lumia 820 will mostly miss Christmas sales, only apparently becoming available in select markets from “November”. More features were promised and product differentiation for different operators continues.

Nokia’s sales were very poor in USA and China where as Europe, India and Brazil did far better. Cash burn was a little bit slower than feared, pushing any potential crisis further down the road. Structural adjustments will start to have a positive effect soon. Non-core asset divestments have continued since the end of the quarter and there will still be forthcoming divestments.

In Helsinki Nokia was up almost 10% for the day but once the Wall Street opened, the stock turned to the red. There is a clear difference in how Nokia is viewed across the pond. This can also be seen in the media, where of course locals want their own companies to do well. This could have even been one reason for the Microsoft union. Nokia will also continue investments in Asha phones. Going forward, near-term visibility is still low and Devices & Services Q4 doesn’t look too rosy. NSN could have sequentially somewhat worse times but is now in a good position with a good product mix.