Kelvin
Devis
The end of an era is here after Microsoft announced that its acquisition of Nokia’s devices and services division on Friday, April 25th. This marked the end of the line for Nokia smart phones.
Nokia, an iconic Finnish company that was instrumental in making mobile phones a staple gadget throughout the world, will now focus primarily on making telecom equipment while Microsoft will use Nokia’s engineering talent to make its own smart phones and tablets.
http://tinyurl.com/bgr-microsoft-april-25th
Nokia’s Beginnings
Nokia began as a paper mill company in 1865. As it developed, it gradually began its original telecoms infrastructure business in the early 1900s.
n Of course, the primary means of telecommunication being the telegraph at the time! Gradually it continued to diversify making such products as tires and rubber boots. n These divisions were eventually spun off leading to the creation of Nokian Tyres and Nokian Footwear.
n With the growth in cell phones, Nokia took the lead in the early 21st century leading to an astonishing 35%+ market share at its peak.
Now, this part of Nokia has also gone the way of its rubber boots has. With the Devices & Services division spin-off to Microsoft likely to be completed early next year.
http://tinyurl.com/seekingalpha-initial-end-nokia.
What will this Acquisition Mean for Nokia?
There wasn’t a pocket in the early 2000s that didn’t bulge with the familiar shape of a Nokia phone – (including mine). The Finnish mobile maker dominated around the world and of the most sold handsets of all time, it still holds positions one to seven (the Nokia 110 takes top spot with 250 million units sold).
Yet! one cannot help but wonder what exactly does this acquisition mean for Nokia?
n It is very likely that its creditworthiness ratings are about to shoot back up to A3 or better at Moody’s. This will therefore easily knock off at least a couple of interest percentage points in any future debt raising by the company.
n It also looks like it is getting a soft loan from Microsoft of $2bn which will also help to bolster its balance sheet and reduce any near-term requirement to go to the capital markets.
n Since”Nokia,” will no longer be owned by the company itself, this leaves the rump of Nokia as the owner of HERE – a mapping division and NSN – a telecoms infrastructure division.
n From Nokia shareholders’ perspective, their CEO has negotiated the sale of its Devices & Services division and will himself transfer over to Microsoft. Even though Elop was a key asset for Nokia this no longer holds true because if one bought into Nokia on the basis of the growth prospects of the Lumia range and due to the charisma of Elop, this story is firmly over.
n There is no more potential for Nokia to be a potential multi-bagger stock – sales will probably still happen and the Lumia range may still sell 20 million plus, but it will only change the Microsoft share price by a few percentage points and not offer any multi-bagger potential.
http://tinyurl.com/seekingalpha-thoughts-end-know.
Not All Is Dead and Buried
As the peak of Nokia’s glory from the early 2000s faded fast because rivals were quicker to evolve with flashier features and newer interfaces, it seems all hope is not lost yet as confirmed by a leaked letter from Nokia to its existing
suppliers :
n The letter hinted that it would like to keep its suppliers as new products are in the pipeline.
n“In addition to becoming a supplier for Microsoft Mobile Oy, we appreciate that you might also remain a supplier to the continuing businesses of Nokia (i.e., NSN, HERE or Advanced Technologies) after the close of the transaction between Microsoft and Nokia Devices and Services.”
http://tinyurl.com/news-is-leaked-reveal-rebrandi
This deal will surely have nostalgic gadgeteers mourning the loss of the Nokia mobile but they can take comfort in the hope that we will see it rise again in some form — even if it doesn’t play Snake.
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nKelvin Davis is the director or Greymouse, a cloud 24/7 oursourcing provider, with offices in Fiji and the Philippines. Insider business news is now available at www.greymousefiji.com/fijisun . Just visit the site and sign up for your free news subscription.