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Nokia’s decision to pay $2.2 billion to buy out the remaining stake in the Nokia Siemens Networks business is expected to put a major strain on its cash reserves, Reuters reports. In fact, Reuters notes that the combined pressures of paying for the NSN acquisition and maintaining its handset business mean that the company “could burn through its cash as soon as next year.” Pohjola analyst Hannu Rauhala tells Reuters that this could further erode Nokia’s position in the mobile market because “if they constantly have to be worried about the cash position, it restricts their ability to move, to react to changes in the market.” The surprise full acquisition of NSN has sparked speculation that Nokia may be planning to spin off its handset business to Microsoft, although Microsoft recently backed out of merger negotiations with the company because it was reportedly worried about Nokia’s low market share.
http://bgr.com/2013/07/02/nokia-cash-position-analysis/
Wall Street is now convinced that Nokia will sell its handset business
Here is a puzzle: Nokia’s cash position has suddenly shrunk from 4 billion euros to 2-2.5 billion euros… but the company’s share price is higher than it was before Nokia announced it will spend 1.7 billion euros to buy full control in Nokia Siemens Networks. Wall Street is feeling perfectly calm even though it now looks like Nokia’s cash burn during the second quarter may have been as high as 850 million euros. Why aren’t investors freaking out about A) the cost of the Nokia Siemens Network acquisition and B) the confession about the handset division cash burn level during spring? At this rate, Nokia may run out of cash during the summer of 2014.
The most plausible answer is that Wall Street is now convinced that Nokia is going to sell its handset unit.
There is no reason to worry about the cash burn rate or current cash reserves if the phone division will be gone by Christmas. Spending nearly half of its cash reserves on the NSN acquisition was such a bold gambit that few people believe that Nokia would have made it without having a clear plan for exiting the phone business.
Is it really this easy? Can Nokia find a buyer for its phone unit even if the most motivated suitor, Microsoft, turned it down as recently as June?
One thing is certain: very close attention will now be paid to Nokia’s June-quarter feature phone unit volume when the company reports its spring numbers. The 10 million unit feature phone volume miss was the biggest negative surprise in the company’s first-quarter report — Nokia’s feature phone erosion is what likely drove Nokia’s spring cash burn in the second quarter. That is the issue that may determine how much money Nokia will burn next winter, and whether that number is going to be big enough to scare off suitors.
Everything now rides on how Nokia’s Asha phone range fared against competition from cheap Huawei and Micromax Android phones in Johannesburg and Mumbai over the past few months.
http://bgr.com/2013/07/03/nokia-handset-unit-sale-analysis/[ This Message was edited by: Tsepz_GP on 2013-07-03 15:04 ]
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Posted: 2013-07-03 16:03:05
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That is SAD
I don't really love Nokia but this is going to really bad. Never really though I'd see Nokia quit the phone business. I sure hope they don't but seems there isn't much hope.
Won't feel good to see Nokia go away.
Hopefully the EOS can help them consolidate market share.
BTW, where is Bonovox ? He hasn't been online in the past few days
[ This Message was edited by: randomuser on 2013-07-03 15:35 ]
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Posted: 2013-07-03 16:24:46
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WTH, I might be a Sony/SE fan since 2005 but I've always regarded Nokia the brand that Introduces me to the world of mobile communication. I blame Elop for all this mess that's happening there.
Stupid Elop should've never been hired as the company's CEO, he's the termite that crippled the foundations of Nokia
[ This Message was edited by: razec on 2013-07-03 15:59 ]
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Posted: 2013-07-03 16:56:11
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Yeah, so sad.Nokia's fault.Elop needs to go to jail.Not saying that WP is crap, but it was Nokia's worst mistake ever.
If they moved out of mobile industry, then start again as a different firm, then, they could start with MeeGo.Of course that's my dream.
Bonovox has said that he won't be visiting Esato anymore...
Here's the
link.
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Posted: 2013-07-03 17:23:41
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Let us wait for the EOS first.
Sometimes it only takes one device (with a bit of markething) to become very profitable.
But i do agree with the rest of the world when it comes to Elop, he needs to be locked up in jail for crimes against the world
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Posted: 2013-07-03 18:21:30
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This is Sad.
If NOKIA leaves..its the end of an Era.Ericsson,SonyEricsson,Motorola,Alcatel and NOKIA would have perished
Windows phones and NOKIA are great..i just hope for a miracle.I hope the other fa nboys wake and realize this is such a good product and most likely serves them better than what they have instead of following the herd.
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Posted: 2013-07-03 21:12:55
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JUST MAKE AN ANDROID DEVICE!!!!!
Do you know how many fans Nokia still has waiting for it to embrace android?
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Posted: 2013-07-03 22:07:16
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yeah real shame if Nokia sell of the phone business!! i really do like their phones! I wish Nokia had not been exclusively using WP as the OS...their hardware on android would be fantastic...I could really see a Nokia resurrection with that!
not saying WP is crap infact I do like it in some ways...I just prefer the Google ecosystem which is best available on android...I really do not want to be using Bing as my default search, and I am sure there are plenty of people who feel the same way
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Posted: 2013-07-03 22:36:16
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Nokia messed up big time.. bad management for decades would do that to any company. Its a shame because their engineering has been top notch for a very long time. Their R&D department was one of the best in the world..
On 2013-07-03 21:12:55, Ranjith wrote:
This is Sad.
If NOKIA leaves..its the end of an Era.Ericsson,SonyEricsson,Motorola,Alcatel and NOKIA would have perished
Software > Hardware ..
we know this from the PC business. The US software cartel has never been more powerful than it is today. Without Google Samsung/Sony/LG and the rest of the OEMs will be nowhere.
Let's just say that Google starts making Motorola phones, and it only provides android to itself.. the rest will be pretty much out of business.
Let's say that Microsoft buys Nokia, and starts making their own phones, and it only provides WP to itself.. the rest will be pretty much out of business.
Apple is already doing it.. so no need for a hypothetical scenario.
Of course, they wouldn't do that, but it gives you perspective.
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Posted: 2013-07-04 00:40:15
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It would be sad if they off loaded their mobile arm. It would be the end of an era indeed, the amount of SE v Nokia discussions in these forums - the sparks really flew ha ha.
May be they just need to bite the bullet and take some tough discussions.
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Posted: 2013-07-04 01:11:03
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