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Euronews: Anger Grows at Nokia Payoff for Elop

Paul Rainford
9/23/2013
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Also in today's EMEA roundup: Vodafone gets EC approval for Kabel Deutschland bid; UK spooks implicated in Belgacom hacking; Telecom Italia considers towers sale.

  • Anger is growing in Finland at the $25 million payoff former Nokia Corp. (NYSE: NOK) CEO Stephen Elop will receive if the proposed sale of its Devices & Services business to Microsoft Corp. (Nasdaq: MSFT) goes through. According to the Financial Times, Finland's prime minister, Jyrki Katainen, called the payoff "quite outrageous," while his finance minister, Jutta Urpilainen, chipped in with: "In addition to the general toxic atmosphere, it may be a threat to social harmony." News that Elop's original contract was amended so that he could return to Microsoft will probably only add fuel to the flames. (See Euronews: Elop Pockets $25M Payoff and The Nokia/Microsoft Conspiracy Theory.)

  • Vodafone Group plc (NYSE: VOD) has been given the green light from the European Commission for its proposed €7.7 billion ($10.43 billion) takeover of Kabel Deutschland GmbH , reports Reuters. "The Commission's investigation confirmed that the activities of the merging parties were mainly complementary," concluded the regulatory muscles in Brussels, in a statement. (See Euronews: Vodafone Clears Hurdle to Kabel Bid and Euronews: Vodafone Strikes €7.7B Kabel Deal.)

  • It seems the answer to our question from last week, Who Hacked Belgacom?, is the UK's GCHQ intelligence agency, according to Reuters, citing a report in Der Spiegel. Documents, including slides from GCHQ that purportedly showed how the agency was looking to "enable better exploitation of Belgacom," were supplied to the magazine by former National Security Agency contractor Edward Snowden, said the magazine. (See British Spooks Tap the Global Net.)

  • Debt-laden Telecom Italia (TIM) , which has in recent weeks been reconsidering its long-term strategy, is now considering a sale of its mobile towers business, reports Bloomberg. One analyst, however, described the proposed move as "too little too late."

  • BT Group plc (NYSE: BT; London: BTA) has announced the remuneration package for its new CEO, Gavin Patterson, who is replacing Ian Livingston. Patterson will receive the same base salary as his predecessor -- £925,000 (US$1.48 million). The Guardian, meanwhile, reports that Livingston, who is leaving to become a trade minister in the UK government, will receive almost £9 million ($14.4 million) in bonuses as a leaving present from BT. Not quite in the Stephen Elop league, but it shouldn't leave him short this Christmas. (See Euronews: BT Sets Date for CEO Handover and BT Appoints New CEO.)

    — Paul Rainford, Assistant Editor, Europe, Light Reading

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    albreznick
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    albreznick,
    User Rank: Blogger
    9/23/2013 | 3:22:13 PM
    Vodafone approval of KB buyf
    Boy, the EC approved that deal pretty quickly. Did they do any kind of investigation? Any conditions placed on Vodafone? What do you think this means for the future of cable in Grmany, Paul? 
    lanbrown
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    lanbrown,
    User Rank: Light Sabre
    9/23/2013 | 12:32:26 PM
    Re: Remuneration
    You don't have to be a conspiracy theorist to see that that what Elop did was not in the best interest of Nokia, its employees or shareholders.  If you look at the last two years of Symbian sales before Elop made the burning platform announcement, you will see that Symbina sales were up year over year by 34%.  They went from 100 million smartphones to 134 million smartphones; and obviously the majority of those were Symbian powered with a few Maemo ones.  The first quarter before the announcement also showed higher sales in the first quarter than the same quarter a year ago.  Once again, it showed growth.  The problem was that people believed in analysts and numbers and when Apple was showing triple digit growth, people were expecting the same from Nokia.  Android had huge growth as well.  The problem is, numbers lie.  800% growth can be a feat or it can be lackluster.  If I went from one sold to eight, that was 800%m but the fact is, total 9 were sold.  Apple and Android had far fewer sales and thus seeing huge growth is not all that hard when you are starting at 0.  In the year that Nokia saw 34 million more Symbian smartphones sold, Apple only sold 40 million that entire year.  So the growth that Nokia saw was almost equal to what Apple sold for the entire year.  That is far from a burning platform.  Elop got the accelerant out and the matches and did the platform burning all by himself.  How did that benefit anyone but himself and Microsoft?  How many Lumia handsets is Nokia selling per year?  It doesn't even add up to what Symbian sales were per quarter.  If he wanted to change course, then he should have added Lumia handsets as an option to Symbian and Maemo/MeeGo.  He knew if he did that though, WP would be a huge failure, even more so than it is today.  The problem that Nokia had, too much internal fighting.  Employees were given a choice as to what they wanted to work on and many wanted to work on N series devices and not E series devices.  This lead to a gap between the two.  You also had the Symbian team up against the Maemo team.  Rivalries can help spur development but that can also cause issues.  The culture at Nokia fostered those issues.  All that Nokia needed was someone to drive a clear path and change the culture.

    Microsoft buying Nokia won't actually help Microsoft but hurt them.  Nokia still owns the patents and the agreement is that Microsoft gets a non-exclusive access to them.  HTC used a HD microphone in one of its handsets and was sued over.  Nokia held the patent and Broadcom was not suppose to sell that chip to anyone but Nokia.  Well, after the closing of the deal, Nokia will license it to HTC.  Nokia Maps will be found on other platforms as well as other Nokia intellectual property.  The PureView camera technology first found in the 808 and then the Lumia 1020.  It won't be long before that is in phones from the competition as well.  The Lumia will not have a single differentiating feature to it.  Expect sales to drop and Microsoft has a hardware division that produces products that even less people want.  Look at Surface RT and how Microsoft alienated their partners.  Surface will die soon as so will WP.  What will the new CEO of Microsoft do?  Well, if it is Elop keep on throwing money at it like Ballmer did and watch the company get acquired.  Oh, look at the past companies he has worked for.  They either filed bankruptcy or there were acquired.
    PaulERainford
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    PaulERainford,
    User Rank: Light Sabre
    9/23/2013 | 11:06:25 AM
    Re: Remuneration
    Judging by the FT report, very recently - as in, after the sale was agreed.
    Sarah Thomas
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    Sarah Thomas,
    User Rank: Blogger
    9/23/2013 | 10:56:00 AM
    Re: Remuneration
    News that Elop's original contract was amended so that he could return to Microsoft will probably only add fuel to the flames.


    That's certainly interesting! Ray's conspiracy theory doesn't sound that far-fetched, huh? When was his contract amended? 
    mendyk
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    mendyk,
    User Rank: Light Sabre
    9/23/2013 | 9:43:47 AM
    Re: Remuneration
    The outrage over Elop's bonus is almost quaint. Have the outraged been paying any attention at all to executive compensation schemes over the past two decades?
    PaulERainford
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    PaulERainford,
    User Rank: Light Sabre
    9/23/2013 | 7:04:10 AM
    Remuneration
    Corporate execs earn millions in bonuses when they don't appear to have achieved that much. Women working 12-hour shifts in unsafe factories in Bangladesh making cheap clothes for the West earn around $25 a month. Funny old world. (But not that funny.)
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