Nokia receives welcome relief as SocGen upgrades to “buy”
Troubled communications firm Nokia received some welcome news this morning as French bank Societe Generale upgraded the company's shares from "hold" to "buy."
The bank explained that Nokia had revised up its guidance for intellectual property licence fees from €500m (£410m) to €600m (£594m) annually on the back of higher fees to be received by Microsoft.
The telecoms company reported yesterday that its Nokia Solutions and Networks (NSN) arm had suffered a 22 per cent drop in sales in the final three months of last year. Nokia's handset division also dropped five per cent in the fourth quarter, with sales down to €2.6n (£2.1bn).
The news saw shares in the Finnish firm crash by 10 per cent.
NSN’s poor performance confirmed SocGen's concerns that 2014 may be a tough year for Nokia. The bank's primary concern with targeting top-line growth is that NSN needs to be more aggressive in bidding for new contracts especially if Nokia wants to increase market share.
As SocGen had already lowered margins for NSN and €600m (£490m) per year for IP fees, the bank's forecasts remain unchanged. SocGen confirmed it is sticking to its target price of €5.80.