Nokia is up 7% in pre-market trading after narrowly beating earnings and revenue consensus. This is a clear case of Ozymandias Syndrome - the mighty have fallen so far that even delivering -21% YoY sales decline now counts as a minor positive surprise. "Two vast and trunkless legs of stone" indeed.
As I speculated a few days ago, Nokia's feature phone strength is providing the company support that may surprise the shorts. The feature phone operating margin climbed to +13% - this is truly impressive considering the feature phone ASP is a rock-bottom 32 euros. The new Asha line of nifty low-end phones only started ramping up in 4Q11 and is picking up steam during 1Q12.
One key to the surprise was the sequential ASP uptick - Nokia's handset average sales price ticked up two euros to 53 in 4Q11. Usually handset ASP level dips sequentially into 4Q11, but this autumn Nokia suffered such a steep ASP fall that the company was actually able to deliver a partial rebound into the Christmas season.
European device sales declined by a crushing -38% YoY - but they were also up +38% sequentially. That was pretty decent considering the Symbian collapse. Asia Pacific was also up a tolerable +8% sequentially and Latin America a perky +23% sequentially. China was a big problem - that-19% sequential fall in device revenues probably reflects the major strides made by Huawei and ZTE in the region.
Smartphones remain a horror story - operating margin crept down to negative -7% and the annualized sales decline is -38%. But the unit did manage a sequential volume uptick of nearly 3 Million units, to 19.6 Million units. The upcoming Lumia launch at AT&T is crucially important.
All in all, a mixed bag indeed - but Nokia did demonstrate once again that its feature phone division still has real kick. The smartphone unit managed to eke out a seasonal uptick even with a portfolio that could be charitably described as "challenging".
