Microsoft Corp. (NASDAQ: MSFT) has completed its acquisition of the handset unit from Nokia Corp. (NYSE: NOK). As it turns out, not everyone is a “perma-bull” about the move. Sterne Agee’s Robert Breza rates Microsoft only as Neutral, and he has decided to ratchet down Microsoft’s earnings expectations in fiscal (June year-end) 2015 and 2016.

Breza’s take is that investors were left with more questions regarding the Nokia integration and the long-term strategy. After integrating the impact of the Nokia Devices and Services segment in the Sterne Agee earnings model, Breza cut earnings per share estimates by 12 cents in 2015 (with less than 30M Lumia units) and estimates a six cent negative impact in 2016 earnings per share.

The $7.5 billion for Nokia’s handset unit adds to Microsoft’s Consumer Hardware segment, which includes Xbox and Surface, contributing to the 12% Consumer business growth. Robert Breza believes that this segment constitutes an important piece to the new “Mobile-first, Cloud-first” strategy under the still-new CEO Satya Nadella.

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After a more detailed look, Breza thinks that integrating Nokia into the model creates uncertainty as Microsoft has provided very few specifics regarding expectations for the new business. The firm expects that the deal will add $8.9 billion in revenues, but still reducing 12 cents in 2015 earnings per share.

Where the problem comes about is Breza’s quote on Lumia sales:

We believe Lumia sales have declined during the past two quarters with estimated unit sales around/below 30 million units for Fiscal-2015. Current sales price have difficulty commanding a premium in a very competitive environment. We are estimating current gross margin around 10% and negative operational margins. Modeling operational efficiency gains between $500 million and $600 million, we believe it will take several quarters to realize the full operational saving potential.

Sterne Agee’s report also takes into account that the climate is now very competitive, showing that Microsoft will have to win over new customers with appealing devices and will have to use the advantages of its integrated platform. It also signals that lower-cost phones could also provide upside, despite intense competition and low margins.

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The call is not harming Microsoft shares in the immediate wake of the report. Microsoft shares were up 0.8% at $42.03 in the first hour of trading. The stock’s 52-week range is $30.84 to $42.29, and the Thomson Reuters consensus price target is currently $42.37.

While this call was more about Microsoft than Nokia, Nokia shares have backed off from their 52-week highs. Just on June 18 we questioned whether Nokia shareholders should have been as happy as they were about the buyback and new capital structure program. We were less impressed than the reaction at the time. Nokia’s ADSs were up at $8.25 then and hit a high of $8.35, but have since pulled back to $7.64.

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