Shares of Nokia (NOK) are up a penny at $5.45 in early trading despite the stock receiving a downgrade this morning from Oppenheimer & Co.’s Ittai Kidron, who cut his rating on the shares to Underperform from “Perform” following the company’s presentation at the Mobile World Congress in Barcelona, Spain, where it unveiled some new phones in various price and functionality categories.
The Wall Street Journal’s Digits columnist Sven Grundberg yesterday described the reception for those devices at MWC as having been hampered by turning out to be less significant than Nokia led people to believe.
Kidron cut his estimate for this year’s revenue from $49.01 billion to $45.06 billion, and cut his ESP estimate a loss of 3 cents per share from a prior expectation for a profit of 20 cents.
Kidron is concerned with the “pace” with which Nokia is rolling out its “Lumia” brand of phones based on Microsoft’s (MSFT) “Windows Phone” operating system. Yesterday Nokia unveiled the “610,” a budget version of the line for the younger crowed.
Lumia appears not to be making the traction it needs to, writes Kidron:
Our checks suggest Lumia production constraints have eased, but demand hasn’t ramped to take advantage or backfill the Symbian erosion. The few bright spots, such as a modestly successful T-Mobile launch, haven’t dented Apple or Android’s smartphone momentum. The smartphone gap is compounded by low-end challenges with Asha’s ramp moving slowly. Lumia lumps. Our checks indicate Lumia’s modestly successful 4Q11 launch is already seeing growing pains. Reviews are increasingly mixed with Nokia’s saving grace being a value angle. Even then buyers have yet to respond, with hope now being pushed out to the late-2012 Windows 8 launch.
As for the “Asha” line of feature phones, they’ve helped Nokia, but Kidron worries cheap Android smartphones will take away their thunder:
Our checks suggest value-priced Android devices (~$100) have already slowed Asha’s ramp. Nokia can respond with price, but this compromises the margin cushion the low-end currently provides.
Fin
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