Company Analysis - Nokia - NOK1V FH Equity April 19 (Bloomberg) -- Nokia Oyj reported a first-quarteroperating loss of 1.34 billion euros ($1.8 billion), burdened bycosts at the unprofitable equipment venture with Siemens AG . The loss includes 1.1 billion euros in one-time charges, ofwhich 772 million euros were for Nokia Siemens Networks, Espoo,Finland-based Nokia said today. Sales dropped 29 percent to 7.35billion euros, the lowest since 2004, as handset sales slumpedin emerging markets and margins in smartphones shrank. Chief Executive Officer Stephen Elop, five months aftershipping the first phone based on Microsoft Corp.’s WindowsPhone software, is now turning his attention to Nokia Siemens,the venture in which he tried to sell a stake last year beforetalks collapsed. After sales fell 7 percent with an adjustedoperating loss of 5 percent of revenue, the unit predicts a“clear” improvement in profitability in the current quarter. “Whether the rest of the year will become acceptable forNSN is written in the stars,” said Thomas Langer , an analyst atWestLB in Dusseldorf who recommends selling Nokia shares. NokiaSiemens “has to show in coming quarters that it can attain amargin of more than 5 percent. As long as they can’t show thatit will remain a ball and chain for Nokia.” ‘Pretty Deep’ Nokia Siemens, whose main competitors are Ericsson AB andHuawei Technologies Co., announced plans in November toeliminate 17,000 jobs, or about 23 percent of its workforce, tofocus on mobile broadband and services. The venture has beenunprofitable in all but two quarters since it was set up inApril 2007. Nokia has lost about 20 percent of its value in the pastweek alone after saying on April 11 that its main handsetbusiness lost money last quarter and will do so again in thecurrent period. It fell 2.1 percent to 2.97 euros at 2:56 p.m.in Helsinki. The first-quarter net loss was 929 million euros, bringingthe total losses in the past year to 2.4 billion euros. “Even the restructuring we think is pretty deep and prettystructural, and we continue to pursue all options as we goforward,” Elop said on a conference call. He won’t elaborate onthe future structure and ownership of Nokia Siemens. Elop vowed last week to take “significant” structuralactions, including potential asset sales, to survive amidcompetition with Apple Inc. and Chinese manufacturers such asZTE Corp. The CEO has announced more than 10,000 job cuts sincethe linkup with Redmond, Washington-based Microsoft. Six-Year Low “We’re acting with urgency and we will communicate thesedetails as quickly as possible,” Elop said today. “We willmake any changes to our organization and team that arecomplementary to our renewed focus.” Once dominant in the mobile-phone industry, Nokia’s marketcapitalization has fallen by about 70 billion euros since AppleInc. introduced the iPhone in 2007. Last quarter, Nokia’sshipments slid 24 percent to 83 million phones, the lowest levelin almost six years. Nokia, which is phasing out its homegrown Symbian system,sold about 2 million handsets from the new Lumia line runningWindows Phone. It plans to increase advertising spending onLumia this quarter, Elop said. Still, its low-end phones failed to cover the costs ofsmartphone transition as rivals introduced cheaper touchscreenmodels in India and China, many based on Google Inc. ’s Androidsoftware. Debt Rating Colin Giles , a 20-year Nokia veteran who was appointed byElop in February 2011 to lead Nokia’s sales organization, willleave Nokia in June for personal reasons, Nokia said today.Giles ran the company’s China operations before becomingexecutive vice president of sales, and stepped in again lastyear to revamp the company’s China operations. Nokia’s four regional senior vice presidents and t
8
19.04.2012 Ticker: MC Nokia OYJ Benchmark: Currency: Helsinki: NOK1V, Currency: EUR OMXHCap (HEXP) Sector: Information Technology Industry: Communications Equipment Year: Telephone 358-7180-08000 Revenue (M) Business Segments in EUR Sales (M) Geographic Segments in EUR Sales (M) Website www.nokia.com No of Employees Devices & Services 23926 Rest of the World 19017 Address Keilalahdentie 4 PO Box 226 Espoo, 00045 Finland Nokia Siemens Networks 14035 China 6130 Share Price Performance in EUR Location & Commerce 698 India 2923 Price 2.95 1M Return -28.1% Reconciliation Brazil 1901 52 Week High 6.36 6M Return -34.2% Common Group Functions Russia 1843 52 Week Low 2.94 52 Wk Return -45.5% Enterprise Solutions Germany 1606 52 Wk Beta 1.16 YTD Return -21.8% Japan 1539 Credit Ratings Bloomberg - S&P BBB- Date 02.03.2012 Outlook NEG Moody’s Baa3 Date 16.04.2012 Outlook NEG Fitch BBB- Date 07.06.2011 Outlook NEG Valuation Ratios 12/08 12/09 12/10 12/11 12/12E 12/13E 12/14E P/E 10.4x 37.1x 15.5x - - 28.9x 16.9x EV/EBIT 8.2x 15.0x 11.8x 640.6x - - - EV/EBITDA 6.2x 8.1x 6.4x 6.9x 48.5x 4.7x 3.3x P/S 0.8x 0.8x 0.7x 0.4x 0.3x 0.3x 0.3x P/B 2.9x 2.5x 2.0x 1.2x 1.1x 1.2x 1.3x Div Yield 3.6% 4.5% 5.2% 5.3% 5.2% 5.5% 5.9% Profitability Ratios % 12/08 12/09 12/10 12/11 12/12E 12/13E 12/14E Gross Margin 34.3 32.4 30.2 29.3 27.0 28.4 28.7 EBITDA Margin 13.0 9.5 9.0 4.1 0.5 5.1 7.3 Operating Margin 9.8 5.1 4.9 0.0 -2.0 2.3 4.0 Profit Margin 7.9 2.2 4.4 -3.0 -2.2 1.0 2.5 Return on Assets 10.3 2.4 4.9 -3.1 -3.9 -0.5 -1.0 Return on Equity 27.5 6.5 13.5 -8.9 -10.2 -0.7 5.2 Leverage and Coverage Ratios 12/08 12/09 12/10 12/11 Current Ratio 1.2 1.6 1.5 1.5 Current Capitalization in EUR Quick Ratio 0.8 1.1 1.1 1.0 Common Shares Outstanding (M) 3710.2 EBIT/Interest 26.9 8.7 8.1 0.1 Market Capitalization (M) 11047.6 Tot Debt/Capital 0.2 0.3 0.2 0.3 Cash and ST Investments (M) 10469.0 Tot Debt/Equity 0.3 0.4 0.3 0.4 Total Debt (M) 5321.0 Eff Tax Rate % 21.8 73.0 24.8 - Preferred Equity (M) 0.0 LT Investments in Affiliate Companies (M) 0.0 Investments (M) 2043.0 Enterprise Value (M) 7942.6 Nokia Oyj is a global mobile communications company that operates a network of production facilities for mobile products and network infrastructure, as well as a network of sales and customer service. The Company also operates research and software development facilities worldwide. NOK1V FH 38’659 130’050 Company Analysis - Overview 62% 36% 2% Devices & Services Nokia Siemens Networks Location & Commerce 55% 18% 8% 5% 5% 5% 4%0% Rest of the World China India Brazil Russia Germany Japan Q.M.S Advisors | tel: +41 (0)78 922 08 77 | e-mail: [email protected] |
Sector: Information Technology Industry: Communications Equipment Year:
Telephone 358-7180-08000 Revenue (M) Business Segments in EUR Sales (M) Geographic Segments in EUR Sales (M)Website www.nokia.com No of Employees Devices & Services 23926 Rest of the World 19017Address Keilalahdentie 4 PO Box 226 Espoo, 00045 Finland Nokia Siemens Networks 14035 China 6130Share Price Performance in EUR Location & Commerce 698 India 2923Price 2.95 1M Return -28.1% Reconciliation Brazil 190152 Week High 6.36 6M Return -34.2% Common Group Functions Russia 184352 Week Low 2.94 52 Wk Return -45.5% Enterprise Solutions Germany 160652 Wk Beta 1.16 YTD Return -21.8% Japan 1539Credit Ratings
Bloomberg -S&P BBB- Date 02.03.2012 Outlook NEGMoody's Baa3 Date 16.04.2012 Outlook NEGFitch BBB- Date 07.06.2011 Outlook NEG
12/08 12/09 12/10 12/11Current Ratio 1.2 1.6 1.5 1.5 Current Capitalization in EURQuick Ratio 0.8 1.1 1.1 1.0 Common Shares Outstanding (M) 3710.2EBIT/Interest 26.9 8.7 8.1 0.1 Market Capitalization (M) 11047.6Tot Debt/Capital 0.2 0.3 0.2 0.3 Cash and ST Investments (M) 10469.0Tot Debt/Equity 0.3 0.4 0.3 0.4 Total Debt (M) 5321.0Eff Tax Rate % 21.8 73.0 24.8 - Preferred Equity (M) 0.0
LT Investments in Affiliate Companies (M) 0.0Investments (M) 2043.0Enterprise Value (M) 7942.6
Nokia Oyj is a global mobile communications company that operates a network of production facilities for mobile products and network infrastructure, as well as a network of sales and customer service. The Company also operates research and software development facilities worldwide.
