Nokia Corporation (ADR) (NYSE:NOK) Sells HQ To Raise Cash

Nokia Corporation ADR (NYSE:NOK) has announced it will sell off its headquarters situated in Espoo, Finland. The new owners of 48,000 square meter facility on prime real estate overlooking the Gulf of Finland will be Finland based property and investment group, Exilion capital.

Nokia Corporation (ADR) (NYSE:NOK) Sells HQ To Raise Cash

The deal would provide Nokia much needed cash totalling euro 170 million. The deal covers the three core buildings, constructed between 1996 and 2000, along with 1,250 parking spaces. Nokia’s chief financial officer said in a statement that Nokia was “very pleased with this outcome”.  However, the deal closed at a much lower rate than what was expected. The estimated sale price was somewhere between euro 200 to euro 300 million.

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Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) preserved ownership through two major recessions, and the sale brings an end to the better days when it could afford to bear “non-core assets”. “As we have said before, owning real estate is not part of Nokia’s core business and when good opportunities arise we are willing to exit these types of non-core assets,” said Ihamuotila. “We are naturally continuing to operate in our head office building on a long-term basis.”

CEO Timo Ihamuotila said that the step was taken to cut costs, and Nokia would continue to operate from the Espoo headquarter on long term basis. The announcement came in the wake of fierce competition in the smartphone category. The phone maker is being sidelined by Samsung in the smartphone category.

Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) has been planning on selling the premises since October as a measure to cut the cost, indicating the decision following its second quarter result in July, where it intended to re-evaluate its non-core operations such as real estate.

Apart from this sale, handset maker also announced the closing of its German service unit and laying off as many as 1,000 employees. The announcement was made after Nokia Siemens network failed to renew the contract with Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE). The company said last year it will cut 17,000 jobs, which is 23 percent of the total.

The Finnish company also agreed to sell its optical network business with the transfer of 1,900 employees to Marlin Equity Partners, and it will further close its Bruchsal site in Germany, which employs as many as 650 employees.

The cash position of Nokia Corporation (NYSE:NOK)  stood weak in the third quarter of 2012. The net cash position capitulated to euro 3.6 billion, compared to euro 4.2 billion in the third quarter of 2011.

Despite hopes that the new launches of Nokia, Lumia 920  and the Windows 8 Phone will bring in some profit for the company, Nokia Corporation (ADR) (NYSE:NOK) is expecting a tough quarter, with rivals Samsung Electronics Co., Ltd. (LON:BC94) and Apple Inc. (NASDAQ:AAPL) dominating the smartphone market and leaving little for others.