Nokia Q2 - don't expect magic, expect more pain

Nokia has previously said that it was focused on building great phones instead of focusing on market share. While that might be a good philosophy for most companies, it doesn't bode well for Nokia investors who want a quick turnaround. Although Windows Phone OS and Nokia Lumias have been well liked by critics and users, who knows if they will ever take off? Although I am less bearish on Nokia than my colleague Peter Garnry, the company does face more than an uphill battle.

Investors keep hoping that this is the quarter that will be better, and that Windows Phones will finally start to sell. So will this be the quarter? Probably not... or probably because Windows Phone 8 will come out later this year along with Windows 8 which will most likely benefit Nokia - well hopefully it will anyway as a little competition never hurt anyone.  

Given the uncertainty and lack of clarity regarding sales of Nokia/Windows Phones and the massive changes that are constantly being made at the Finnish phone maker, analysts' expectations are pretty much all over the place. Net Income estimates range from EUR -100 m to -1 bn, and revenue estimates from between 6.5 bn and 8.5 bn which basically means that you can expect a lot of volatilily from the Q2 earnings report.

If we look at Chart 2 we can see that in the past three years, analysts have continuously revised down their quarterly EPS estimates and there is no expectation that this quarter should be any different, so expect some disappointment... again. There probably won't be any large surprises since smartphone market share has already been released by Nielsen, indicating that Nokia's market share keeps dropping along with its share price. 

Trends don't often break, especially in the psychological world of trading, so things will most likely get worst before they get better for Nokia. So if you are a Nokia shareholder, I feel for you...