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Nokia Denies Network Sale Again

Light Reading
LR Mobile News Analysis
Light Reading
7/22/2004

Nokia Corp. (NYSE: NOK) has again been forced to deny rumors that it is considering the sale of its networks business, days after the division impressed with a strong set of Q2 sales results.

According to a report today in Italian newspaper Finanza Mercati, Nokia is mulling the sale of its networks division to either Cisco Systems Inc. (Nasdaq: CSCO) or Lucent Technologies Inc. (NYSE: LU) for €20 billion ($25 billion).

This latest scuttlebutt follows speculation last October that a sale could be in the cards (see Nokia Denies Network Sell-Off).

"There is absolutely no truth in it at all," states communications director Thomas Jönsson. "There are no such plans. Networks is an important and integral part of Nokia. Absolutely not." [Ed. note: That's a "no," right?]

Analysts believe a sale would make little sense in light of the division's recent turnaround. The networks division is now the company's star performer, following a sharp fall in demand for its handsets, with network sales rising 6 percent in the second quarter of this year to €1.6 billion ($2 billion), generating an operating margin of 16.2 percent (see Nokia Slumps on Q2 Results).

"The performance of the networks division is impressive and it is producing some good margins and growth," comments Gartner Inc.'s Jason Chapman. "The idea of selling the networks business seems to bubble up every now and again but I can't see how it would make much sense."

— Justin Springham, Senior Editor, Europe, Unstrung

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