Questionable financials spark new rumors that Nokia is going to sell its handset business

Questionable financials spark new rumors that Nokia is going to sell its handset business
Apparently, the recent deal for Nokia to purchase Siemens stake in Nokia Siemens Networks has turned some heads, but surprisingly noton Wall Street. The thing is that analysts can't quite understand how the financials are going to work, and are prompting many to once again bring back the rumors that Nokia is planning to sell off its handset business, but Wall Street is perfectly calm right now.

Here's the problem with the math: a recent report by Reuters has said that Nokia is "burning through its cash". Nokia's cash position has dropped from 4 billion euros to somewhere in the range of 2 to 2.5 billion euros, and that was before Nokia announced that it was planning to spend 1.7 billion to buy out Siemens. The theory is that Nokia could run out of cash as soon as next summer. 

But, Wall Street doesn't see this as a problem, and the theory behind that non-reaction is that Nokia is planning to sell its handset business. Of course, we've heard these rumors before. Just about every year, there is a new rumor that Microsoft is going to buy Nokia (or almost bought Nokia, but negotiations mysteriously fell apart), and Huawei has recently expressed interest in buying Nokia, before backtracking on that idea. The Huawei idea was just a one-off comment at first, but recently a former Nokia exec did join Huawei, so we may hear more on that. 

source: Reuters via BGR

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52 Comments

55. 7thspaceman

Posts: 1597; Member since: Feb 14, 2011

Folks there could be some truth in this because maybe the main reason Microsoft may have backed out of the deal to buy Nokia not long ago was Nokia was tied up with Siemens. Siemens may have priced their share Of Nokia so high that Microsoft walked out the deal plus the fact Microsoft did not want to deal with Siemens. Now that Nokia is free now Microsoft can seal the deal and buy Nokia and I hope that Microsoft does Buy Nokia because Microsoft has no guarantee that it's other OEM partners will continue to make Windows 8 smart phones because they do not sell as well as Apple Iphones or Android smart phones

52. Edmund

Posts: 656; Member since: Jul 13, 2012

As they've already stated, it will fund the acquisition with a bridge loan, probably from the sale of Convertible Notes. Siemens is a future cash-cow that could prove to be extremely profitable for Nokia. Its potential growth is seemingly limitless, particularly when you think about the fact that countries like the USA, among others, are still reliant on an ageing DSL network. To this end, high-speed broadband (in the true sense of fiber-to-the-home) is the next logical step toward achieving the Holy Grail of multifarious communication - convergence. Let's also not forget who their major partner is - Microsoft - and If you think they don't have $1.7 billion to spend on a few convertible notes, then sadly you're even more dellusional than these so called "expert analysts".

51. xtremesv

Posts: 299; Member since: Oct 21, 2011

Nokia, once a smartphone titan, punished for its lack of innovation and killed off by Microsoft.

44. b1acktiger

Posts: 223; Member since: May 19, 2012

Existence of Nokia is a need for the users to keep the smartphone market hot and competition among could benefit the users and more innovation. Duopoly of Apple and Samsung is hurting now.

32. FISTFLY

Posts: 27; Member since: Jul 03, 2013

Don't do that, Nok!!

23. Shrihari

Posts: 104; Member since: Jan 29, 2013

nokia before closing yourself please make one try with android....

21. Stoli89

Posts: 333; Member since: Jun 28, 2010

...or...someone on Wall Street benefits from this story by trying to avoid an iminent short squezze. Do you really think the BoD of Nokia would approve the purchase of 49% of NSN without looking at the underlying cashflow to finance this approach? If cash is so limited, do you really think the BoD would approve of this plan without having a buyer for the other business already in hand. If it did, don't you think it would be material to legally disclose this fact beforehand to the investors? The other "story" could be that Nokia's cashflow is actually improving and PROJECTED to continue to improve. That management is confident in these projections and willing to use a portion of exisiting reserves to take full ownership of a business that is cashflow ACCRETIVE! On top of this, Nokia is already carrying the overhead of NSN (all employees, etc) as the controlling 51% entity. Clearly, the advantages of a full consolidation must also be considered. Lastly, what if a Private Equity firm or consortium of firms are willing to purchase full ownership after NSN's consolidation under Nokia. The previous 49% sale wasn't going to help a PE firms approach...but now that Nokia will have 100%...maybe...just maybe...Nokia already has an offer at a very nice return for its efforts. IMHO, the story your floating is for benefit of the short community.

42. UrbanPhantom

Posts: 949; Member since: Oct 30, 2012

The story is likely to be false, and was put out by those who are shorting Nokia, the likes of which have been caught off guard by Nokia's talks with Microsoft and also their NSN consolidation purchase. They are looking to avoid being smashed before Q2 results are released on July 18th, and spreading myth about cash burn is designed to help them to buy extra time to exit their short positions...

19. KINGJUAN27

Posts: 210; Member since: Jul 02, 2012

Get your facts straight Michael H! IDK if your articles are BS, biased or you're just plain stupid. Pfft!

33. FISTFLY

Posts: 27; Member since: Jul 03, 2013

So this is not true? Can you confirm something?

37. MartianMe unregistered

he's all of those things...

17. jedpatrickdatu

Posts: 169; Member since: Jan 24, 2013

By "handset business" does this mean Nokia's low-end phone business? Or will the Lumia business be sold too?

15. jackhammeR

Posts: 1548; Member since: Oct 17, 2011

as usual PA spreads some stupid rumors and the author of this crapticle doesn´t even know what he´s writing about. Is it so hard to read with understanding?

12. ardavan

Posts: 6; Member since: Jul 03, 2013

"Nokia's cash position has dropped from 4 billion euros to somewhere in the range of 2 to 2.5 billion euros, and that was before Nokia announced that it was planning to spend 1.7 billion to buy out Siemens" Ehmm..no. Didn't you even read your sources? Reuters: "Nokia put its net cash position at 3.7-4.2 billion euros at the end of the second quarter, and said that if the NSN deal had closed in the second quarter, the cash position would have been 2.0-2.5 billion euros." It clearly says that net cash is 3.7-4.2 billion EUR and would be 2.0-2.5 HAD the NSN deal closed in the second quarter. Correct your article.

16. CardiWPfan

Posts: 129; Member since: Sep 12, 2012

Thank you, thank you for summing that up perfectly!!

9. techspace

Posts: 1037; Member since: Sep 03, 2012

if the sales aren't satisfactory, they should make android devices as well, because that is the only option they have they can also port their exclusive wp apps to android there are many people who love nokia and pureview...

5. SIGPRO

Posts: 2819; Member since: Oct 03, 2012

I hope Nokia will not sell its mobile devision, man i dont want a phone running Android os!

10. reten

Posts: 43; Member since: Apr 03, 2013

So what phone do you use now

14. SIGPRO

Posts: 2819; Member since: Oct 03, 2012

I use a N9, have also 3 droid devices and after these 3 droid devices i will never buy a droid device again! Android is ot the os for me, to slow and laggy with a lot of issues! Even WP performs better than Android.

28. TROLL

Posts: 4851; Member since: Apr 13, 2012

Jellybean is on par with Wp8 along iOS! Even iOS is much better than Wp8. I'm stuck here using the "Bing useless" search engine. I every time have to rely and use "Zune" "GOD That really sucks" all the major apps are available on iOS and Android. I'm using the L920, whenever I have to search for something I have to go right back which is a pain staking. The only great thing about this phone is taking great photos ®

34. the_best

Posts: 139; Member since: Oct 14, 2012

you can switch to googles searchengine in WP if you want.

13. boosook

Posts: 1442; Member since: Nov 19, 2012

You won't, because Nokia will sell its mobile division for sure, but to Microsoft. They cannot survive without producing an Android phone, but they'll never make one because of Microsoft's influence on Nokia. So the logical consequence can be only one: Nokia will sell the mobile division to Microsoft, that's what we knew from the beginning.

20. alterecho

Posts: 1106; Member since: Feb 23, 2012

I shudder to think of that.

36. MartianMe unregistered

And that will be the end of a great empire .... so sad :(

50. dre786

Posts: 46; Member since: Nov 10, 2012

you are so maD

27. TROLL

Posts: 4851; Member since: Apr 13, 2012

Google and Android does not need that cave old age always using a year old specs on there phone company. Looks like no one wants to buy Nokia except for the patents it hold companies would love to. ®

4. ryq24

Posts: 876; Member since: Oct 17, 2011

If nokia sell their handset business then what is left of nokia? Back to making paper?

7. Nematc

Posts: 28; Member since: Feb 02, 2012

No they will continue with luna bluetooths and monster headsets, Happy?

2. ryq24

Posts: 876; Member since: Oct 17, 2011

If nokia sell their mobile business then what is left of nokia? Back to making paper?

8. Nematc

Posts: 28; Member since: Feb 02, 2012

No they will continue with luna bluetooths and monster headsets, Happy?

* Some comments have been hidden, because they don't meet the discussions rules.

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