Nokia Q4 results will quiet skeptics on Lumia 920 sales

carass

Every party has a pooper; or to borrow another phrase, someone who feels the need to rain on a parade. In the case of Nokia (NYSE: NOK) and some recently encouraging reports about sales of its new Lumia 920 smartphone,   Pacific Crest’s James Faucette has joined a small list of bearish analysts on Nokia’s Lumia 920 fourth quarter sales that could best be described in the immortal words of Vice President Spiro Agnew as “nattering nabobs of negativism.”

On Dec. 12, Faucette wrote in a research note to investors that the “recent rise in the [Nokia] stock may have been driven by what we would characterize as an overly optimistic interpretation of initial Lumia sales commentary.” He called into question reports that the Lumia 920 had in fact seen strong demand in Germany, for instance, arguing that “while this may have been the case for a few thousand initial units, our checks indicate that retailers in Germany say they are only now beginning to receive the 920 across normal sales channels, and the volumes being received are still very small.”

Faucette also pooh-poohed reports of strong sales of the 920 by AT&T (NYSE: T), insisting that “based on the inventory on hand, we believe AT&T is selling only 10,000 to 15,000 Lumia 920 devices per week at the moment” and “we believe stores are able to sell available stock in a few days; however, we found most stores getting only a handful at a time.” He went on to estimate that Nokia is “tracking toward shipping roughly 1 million new Windows 8 products in the December quarter, while it looks likely to sell-through roughly half of those units, based on current run rates.”

Unfortunately, Faucette’s negative assessment flies in the face of several analysts and industry observers, most notably RBC’s Mark Sue who, in a Nov. 26 note, reported that with aggressive promotion of Windows 8 from Microsoft (NASDAQ: MSFT), Nokia's Lumia 920 has been experiencing sell-outs at carriers and major retailers, and expects Nokia to exceed the 6.5 million smartphone units forecast.

RBC’s note was followed last week by Oppenheimer, which slightly raised its estimates for Nokia after its channel checks indicated the company is having a strong fourth quarter. In fact Nokia should do better than expected, although the firm remains cautious about Nokia over the longer term. Oppenheimer projects that Nokia will ship 8-9 million smartphones in the quarter with demand roughly equally balanced between the Symbian, Windows Phone 7, and Windows Phone 8 platforms.

According to a report from mobile ad firm AdDuplex earlier this month, Nokia is the top Windows phone hardware maker overall, with 76% of market share compared to competitors HTC with 12%, Samsung with 9%, and LG with 2%, respectively. AdDuplex also found that four of the top five most popular Windows phone handsets are from Nokia (all running Windows Phone 7), while Nokia is the top Windows Phone 8 hardware maker with 80% of market share, followed by HTC with 20% and Samsung with .3%, respectively.

In a CNET interview posted online today with Nokia CEO Stephen Elop, the door was opened to the possibility of a Verizon (NYSE: VZ) deal (right now, the company has an exclusive relationship with AT&T). When asked if a flagship phone deal with Verizon is being worked on, Elop responded: "We are planning a lot of exciting things with Verizon as well." 

Before Faucette tried to throw cold water on Lumia sales expectations, Nokia shares in recent weeks have traded sharply higher, up more than 23% over the past three weeks.  Right now, Nokia is keeping sales numbers for its Lumia 920 close to the vest, so we’ll just have to wait for the company to report Q4 and full year 2012 results on Jan. 24, 2013. Yet, it’s worth recalling that in the last two quarters Nokia beat analyst estimates.