Nokia: Down but not out (yet)

 Nokia, a former leader in mobile phones announced earnings yesterday that weren’t as bad as many had thought. Although our team wasn’t impressed.

The company swung to an operating profit of €182M from a loss of €227M in Q2. However net cash from operating activities was still negative -€429M vs. €852M a year ago. Gross cash of €8.8B and net cash of €3.6B or about $3.40 per share is what’s keeping the stock alive. But unless the company can stop burning cash and deliver competitive product that cash balance will not last for long.

The company also said “competitive industry dynamics” continue to hurt its business. Primarily the brilliant smart phone devices from Apple and Samsung. Also don’t expect any big numbers this Christmas season although  “consumer demand, particularly related to…Lumia” is improving.

The last statement is unlikely to get investors too enthused but shares are rallying  about 3% to cross the $3 per share mark. Mind you just a year ago shares traded as high as $7.20 and have hit a low of $1.63 in July.

We continue to have an immediate neutral and short-term negative outlook on the stock.

Access the full earnings report from Nokia web-site