Nokia Ushers In New Era, Retires NSN Name
With its devices business finally offloaded, Nokia has unveiled its new roadmap, a new senior team, and financial plans. (See Microsoft Officially Closes Nokia Buy.)
It also reported its first-quarter results, announcing revenues of €2.66 billion (US$3.7 billion) and an operating profit of €242 million ($335.4 million). (See Nokia Reports Q1 .)
With the sale of the mobile handsets unit to Microsoft now complete, Nokia now comprises three businesses that generated about €12.7 billion ($17.6 billion) in revenues in 2013:
- Networks (currently known as NSN), the network infrastructure and professional services giant, which accounts for about 87% of revenues. The NSN name will be phased out, with the business in future referred to as Networks, comprising Mobile Broadband and Global Services. This business will be run by Samih Elhage, who will be chief financial and operating officer.
- HERE, the mapping and location applications unit, which generates about 8% of group revenues. Michael Halbherr is the CEO of that business, which will focus on connected cars, cloud-based services for personal locations applications, and location-based analytics. HERE currently provides the technology for about 80% of car navigation systems, and counts the likes of Amazon, Microsoft, and Yahoo as customers.
- Technologies, the licensing unit that generates sales from Nokia's patents portfolio, which generates about 5% of sales. Henry Tirri is acting head of Technologies.
The new Nokia will be headed up, as expected, by current NSN CEO Rajeev Suri, who takes on the role officially from May 1. Nokia Chairman Risto Siilasmaa, who had been Nokia's interim CEO, will now focus on his role as chairman.
Suri will be supported by Timo Ihamuotila as group chief financial officer, Barry French as executive vice President of marketing and corporate affairs, Hans-Jürgen Bill as executive vice president of human resources, and Maria Varsellona as executive vice president and chief legal officer.
As a result of the devices sale, Nokia has about €7.1 billion ($9.84 billion) in net cash, so it's planning (subject to shareholder approval) to pay off some debts and returning some money to its shareholders in what it is calling a "€5 billion capital structure optimization program."
- Nokia plans to pay ordinary dividends of €400 million ($555 million) this year and the same amount in 2015.
- In addition it is planning a special dividend this year of about €1 billion ($1.39 billion).
- It is also planning to spend €1.25 billion ($1.73 billion) on a share repurchase program.
- Nokia intends to pay off about €2 billion ($2.77 billion) in debt during the next two years.
The plan "is aligned with the long-term interests of our customers and shareholders," said CFO Timo Ihamuotila in the company's official statement. "Together with our continued focus on solid business execution, these capital structure enhancements support our longer-term target to return to an investment grade credit rating, which would further affirm our long-term competitive strength and support our strategic objectives."
Investors liked the plan, as Nokia's share price on the Helsinki exchange rose by 7.3% to €5.51.
Suri and his team will now be looking to put the past few years behind them, as the turmoil surrounding the demise and sale of the handsets business has been a major distraction. (See Microsoft's Elop Denies He Was a Trojan Horse and The Nokia/Microsoft Conspiracy Theory.)
The divestment of the devices business has coincided with a more stable, healthier financial position for the Networks business, which has now all but come to the end of a long but well executed restructuring program. (See NSN Braces for Tough Start to 2014.)
Now Suri has a new challenge -- maintain the Networks business as a leading provider of infrastructure and supporting services to telcos that are facing operational and financial challenges of their own, and build up HERE and Technologies into more substantial businesses that can help provide scale and a broader mix of revenue opportunities within the Nokia portfolio.
— Ray Le Maistre, , Editor-in-Chief, Light Reading