4Q20 earnings beat from exceptionals, potentially pulling forward from Q1 Nokia delivered an earnings beat in Q4, with revenues 1.9% higher than consensus expectations and with operating margins of 16.6% versus consensus expectations of 14.8%. However, the beat was driven by exceptionals 1) EUR 150m early revenue recognition in Mobile Access (initially scheduled for 2021), and 2) EUR 100m positive benefit from their venture fund fluctuation. Q4 also benefitted from earlier than expected cash collection of EUR500m. CMD review - 2021 the year of reset At the 19 March CMD, Nokia detailed financial targets for the new segments. From a broader market standpoint, the overall addressable market is expected to grow at a CAGR of 1% to 2%. From a margin perspective, the largest improvements are expected to come from the Mobile Networks and Cloud and Network Services segments. Mobile Networks margins are expected to improve from 0.5% in 2021 to 6.5% in 2023 (at mid-point), and Cloud and Network Services margins are expected to improve from 4.5% in 2021 to 9.5% in 2023. On a group level, the company is targeting 7% to 10% comparable operating margins in 2021, expanding to 10% to 13% in 2023. Nokia will report Q1 on Wednesday morning. 1Q21 earnings vs consensus This will be the first set of results Nokia will report under its new business mix breakdown. We are 3% below consensus on revenues as we see headwinds from FX, the loss of Verizon business and the continued ramping down of China revenue. Q1 could see FX headwinds as large as 5% due to the relative strengthening of the EUR. We are 2pp above consensus on gross margin and 1pp above on operating margin, but we are EUR100m below consensus on net cash. Remain Neutral. Start of a restructuring journey 2021 is expected to be a tough year for Nokia due to the loss of RAN business from Verizon combined with pricing pressures in North America. From a timing perspective, management also commented we are...