Nokia In Better Shape After Selling Device Division: Chairman

Nokia 8Hermann / Pixabay

Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) chairman Risto Siilasmaa explained, in a TV1 interview Saturday morning, his view of the problems during the decline of Nokia’s cell phone business and the seriousness of the situation before the sale of mobile phones business to Microsoft.

Siilasmaa said, “Nokia was in a situation where the potential for success in the handset business was getting negligible.”

Nokia-Microsoft deal was a rational decision

He added that if the company continued with the same route for longer, then major changes would have occurred “independent” of Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V). Siilasmaa also said that a company with thin funds and running loss gradually reaches a point, where others take decision for the entity, says a report from Yle.

“The Microsoft deal didn’t cause me to lose sleep, it was the situation before it [that did],” he said.

The Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s device and service segment acquisition by Microsoft came as a surprise to many as the company was a national symbol in Finland. However, Siilasmaa thinks that the business has to ride a full cycle, and selling off handset business was a reasonable decision for Nokia, and is really only the end of one phase of the company.

He said that the smartphone business is slow at present, and the industry has reached a point where two big players hold the largest of the market shares. All other device manufacturers are either running at loss of breaking even, and also, there is no near-term solution to the problem.

Nokia strong on financials

In the interview, the chairman assured shareholders Nokia is profitable and has a sturdy balance sheet, and that its business value has been enhanced from the market point of view. The remaining business of Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) has surged approximately ten times after the sale of its handset division and purchase of its network activities.

Siilasmaa said that he would prefer that no single company becomes the only pillar for any country in the future. He added that it would be far better if Finland survives on more than one large and globally successful company, along with a more balanced business structure.

“But of course, Nokia also has to have big ambitions to grow,” he adds.

After handing over its device and services business to Microsoft, Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is trying to add value to its network operations, mapping services and the development of new technologies. Siilasmaa mentioned various kinds of cloud services, smart cars and the development of other smart devices. He also said that notable investments will be made in these segments.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

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