Mobile phone maker Nokia Corp. (NYSE: NOK) announced today that it expects fourth-quarter operating margin for its devices and services business to fall in a range from flat to +2%, compared with an earlier estimate of a drop of 6%. Shares are soaring on the report.
Net sales for the division, Nokia’s largest, are now expected to reach €3.9 billion ($5.1 billion) in the quarter. Total smartphone sales are now forecast at 15.9 million units, of which 4.4 million are the company’s Lumia smartphones running the Windows Phone operating system from Microsoft Corp. (NASDAQ: MSFT).
The company attributed the jump to “better than expected financial performance in the Mobile Phones business unit and Lumia smartphones.” Nokia also cited lower-than-expected operating expenses in the devices and services group due to better-than-expected cost reductions from its restructuring program.
Sales at its joint venture with Siemens A.G. (NYSE: SI), Nokia Siemens Networks, are also tabbed to come in higher than previously expected. Compared with a previous estimate for an operating margin of 8%, the company now expects operating margin of 13% to 15%.
For the first quarter of 2013, Nokia now expects devices and services margin of about -2%, plus or minus 4%. The company cited “competitive industry dynamics” (promotional pricing) and a traditionally weak quarter for sales as drags on quarterly results.
The stock is up 18.6% in premarket trading this morning at $4.45 in a 52-week range of $1.63 to $5.87.
There is a simple question to ask here: If Nokia can have results which are better than expected, or less bad, then can Research in Motion Ltd. (NASDAQ: RIMM) do the same? Anything is possible, and RIM shares are up about 3% at $11.84 in early trading.
UPDATE: Shares are up more than 21% shortly before the open, at nearly the average daily volume already.