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Will Top-Line Expansion Boost Nokia's (NOK) Q1 Earnings?

Nokia Corporation NOK is scheduled to report first-quarter 2023 results on Apr 20. In the last reported quarter, the company delivered an earnings surprise of 14.29%. It pulled off a trailing four-quarter earnings surprise of 9.65%, on average.

Despite macroeconomic volatility and geopolitical uncertainty, the company is likely to have recorded higher revenues year over year attributed to a positive demand for its next-generation network solutions, IP routing solutions and its consistent investment in research and development to develop innovative technologies.

Factors at Play

In the first quarter, Nokia inked a new cross-license 5G patent agreement with Samsung after the previous deal expired at the end of 2022. The undisclosed deal includes Nokia’s essential inventions in 5G and other technologies. Per this agreement, the company will receive payments from Samsung for a multi-year period effective from Jan 1, 2023. The deal accentuates Nokia’s strong patent portfolio, long-term investment in R&D and rich heritage in cellular and other technologies.

Nokia's integrated SIM (iSIM) Secure Connect technology, offered as a software-as-a-service delivery model, has been chosen by Airtel to expedite digitalization in Africa. By incorporating Nokia's iSIM and embedded SIM technology, Airtel's verification and authentication capabilities will be strengthened, enabling the company to remotely store and manage multiple subscriptions on its network.  Hence, these developments are likely to have a favorable effect on Nokia’s first-quarter performance.

During the quarter, Hrvatsk Telekom selected Nokia’s Converged Charging software solution to ramp up network modernization. The Nokia Converged Charging is a cost-efficient solution that empowers service providers to exercise greater command over their software application ecosystem. With more than one billion customers worldwide, this charging software solution is among the top choices for major communication service providers.

In the quarter under review, Nokia collaborated with AT&T and accomplished a successful trial of an Open Radio Access Network (RAN) compliant near real-time RAN Intelligent Controller (RIC) with a native E2 interface. AT&T provided network support during the trial to facilitate the testing and validating the near real-time RIC platform running on Nokia AirScale base stations. The newly-introduced RIC, when implemented with xApps, improves performance and allows greater flexibility as it enables RAN optimization according to the requirement of operators. Nokia is one of the first major RAN vendors to demonstrate these capabilities.

In the first quarter, Nokia enhanced its AVA Energy efficiency software to decrease energy consumption in communication networks. This advancement is expected to assist operators in streamlining network diagnosis and troubleshooting procedures by reducing the need for unnecessary manual fixes, minimizing overall electricity expenses and promoting environmental sustainability through a reduced carbon footprint.

DOCOMO has chosen Nokia's IP routing solutions and Network Services Platform to boost its nationwide network capabilities. The implementation of Nokia's FP5 silicon-integrated 7750 service routers will improve performance, increase capacity by approximately three times and decrease power consumption by 75%. This will enable DOCOMO to meet the growing bandwidth requirements. These developments are likely to have a positive impact on the company’s first-quarter earnings.

The Zacks Consensus Estimate for the company’s total revenues stands at $6,038 million, indicating an increase from $6,001 million reported in the prior-year quarter. Adjusted earnings per share are pegged at 9 cents suggesting a marginal expansion from the prior year quarter’s recorded figure of 8 cents.

Earnings Whispers

Our proven model does not predict an earnings beat for Nokia this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, as both are pegged at 9 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Nokia Corporation Price and EPS Surprise

Nokia Corporation Price and EPS Surprise
Nokia Corporation Price and EPS Surprise

Nokia Corporation price-eps-surprise | Nokia Corporation Quote

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Zacks Rank: Nokia currently has a Zacks Rank #3.

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Verizon Communications Inc. VZ is set to release quarterly numbers on Apr 25. It has an Earnings ESP of +0.63% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Corning Incorporated GLW is +3.71% and carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Apr 25.

The Earnings ESP for Meta Platforms, Inc. META is +8.00% and sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Apr 26.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Verizon Communications Inc. (VZ) : Free Stock Analysis Report

Nokia Corporation (NOK) : Free Stock Analysis Report

Corning Incorporated (GLW) : Free Stock Analysis Report

Meta Platforms, Inc. (META) : Free Stock Analysis Report

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