Nokia''s diversification helps to weather the uncertainty Going into Q1 we recently downgraded Ericsson to Neutral, preferring Nokia as an Outperform (click here for the note: Choppy year ahead; Prefer Nokia''s diversification) due to its diversification into Network Infrastructure, capital returns, IPR catalyst and long-term margin optionality. Last week''s results demonstrated just that. Nokia delivered an overall ex-Licensing ~+2% beat to adj. EBIT as strength in Networks Infrastructure more than offset weakness in Mobile Networks. Looking ahead to H1, Mobile Networks continue to face margin pressures as North America growth fades while India 5G rollouts ramp, and we have 1H23 gross margins falling -2.5% y/y (this compares to Ericsson ex-IPR Networks gross margins falling ~5% y/y in 1H23. We note that Nokia has a relatively smaller footprint than Ericsson (~40% less footprint), and having ''lost'' Verizon in 2021 may be a silver lining after all (given Verizon''s indicated lower CAPEX spending in FY23). Network Infrastructure continues to outperform as supply chain eases at Optical Networks, FP5 orders ramp at IP Networks, and Submarine Networks continue to be driven by Webscaler network buildouts. Management also commented order book looks good entering into 2023. We continue to believe Nokia''s diversification would help offset Mobile Networks choppiness. 2023 guidance looks conservative with LT margin optionality Nokia has guided for 2023 operating margins of 11.5-14%. We estimate excluding Oppo and Vivo catch-up payments the range would have been ~80bps lower indicating a step-down from 2022 levels which appears conservative. Management detailed LT margin targets at Network Infrastructure (IP and Fixed sustaining at mid to high-teens, Optical improving from LSD to double-digits, Submarine from LSD to HSD). LT margin optionality remains at Mobile Networks vs Ericsson. Remain Outperform on Nokia given its diversification and capital returns We...