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TECHNOLOGY: RV Update: Ericsson vs. Nokia

TECHNOLOGY
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  • Ericsson’s curve outperformance vs. Nokia has resumed in recent weeks.
  • Move is particularly evident at the long end where the Ericsson 29s are broadly in line with the interpolated Nokia curve and within 5bp of Ericsson 28s (albeit with a cash price just below EUR 90).
  • Consensus changes since the last earnings have favoured Ericsson, particularly on the top line, where consensus has moved higher for Ericsson but markedly lower for Nokia as per the below graph, but also in operating margins and the net cash positions to a lesser degree.
  • We also had rumours in quick succession in early September that Nokia was exploring a sale of its Mobile Networks segment to Samsung followed by rumours of an impending CEO change. Recent smaller contract/partnership headlines have seemed to favour Nokia though none were material enough to shift the trend in equity/spreads.
  • Ericsson/Nokia report before other peers with Q3 results on 15 and 17 Oct respectively.

 

 

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  • Ericsson’s curve outperformance vs. Nokia has resumed in recent weeks.
  • Move is particularly evident at the long end where the Ericsson 29s are broadly in line with the interpolated Nokia curve and within 5bp of Ericsson 28s (albeit with a cash price just below EUR 90).
  • Consensus changes since the last earnings have favoured Ericsson, particularly on the top line, where consensus has moved higher for Ericsson but markedly lower for Nokia as per the below graph, but also in operating margins and the net cash positions to a lesser degree.
  • We also had rumours in quick succession in early September that Nokia was exploring a sale of its Mobile Networks segment to Samsung followed by rumours of an impending CEO change. Recent smaller contract/partnership headlines have seemed to favour Nokia though none were material enough to shift the trend in equity/spreads.
  • Ericsson/Nokia report before other peers with Q3 results on 15 and 17 Oct respectively.