In the never-ending stream of gloomy news surrounding beleaguered Finnish phone maker, Nokia Corporation (NYSE:NOK), here’s one that could give solace to the company’s shareholders.
It has been reported that Nokia’s Chief Executive, Stephen Elop, and other members of the board, purchased over a million shares of the company last week in a concerted show of confidence in its future.
Nokia Corporation (NYSE:NOK) (BIT:NOK1V) disclosed the buying by its insiders this week. It appears Elop bought 275,000 shares, raising his stake in Nokia to 425,000 shares, and Risto Siilasmaa, the company’s new chairman, purchased 333,000 shares. At least five other board members also bought shares of Nokia from the open market last week. “The purchases underscore the board and our leaders’ commitment to Nokia and confidence in our future,” Nokia spokeswoman Susan Sheehan wrote in an email.
It may be noted that Nokia’s board had recently voted to enhance the amount of stock options to be paid as compensation to senior executives not on Elop’s senior management team, in a move designed to retain management talent through the company’s restructuring efforts.
Nokia Corporation (NYSE:NOK) has relentlessly lost market share to Apple Inc. (NASDAQ:AAPL) and Samsung, and reported many quarters of losses. Though the company has tied up with Microsoft for running its phones on the latter’s Windows Phone 8 operating system, it is a moot point whether this would help Nokia to wrest back its once-lofty market share. In June Nokia announced that, in addition to selling off 90 per cent of its luxury handset subsidiary, Vertu, to a private equity group, it would shut down several factories in Finland, Canada, and Germany, thereby cutting a further 10,000 jobs. Reflecting its performance, Nokia was recently further downgraded by the rating agency, Fitch, giving it a BB- score and putting its credit worthiness a step closer to junk status, citing a doubtful ability to climb out above the present trough in its business.
The company’s stock has mirrored its fortunes – falling more than 90 percent over the past five years. The news of the buying by company directors probably pushed up its price by about 9 percent, to 1.95 euros in Finland.