Last week re/code reported that Nokia Technologies was planning to return to the consumer mobile market by the end of 2016. However, the company has now confirmed via a short and to-the-point statement, that it is planning no such undertaking. The statement, in the company’s own words:
Nokia notes recent news reports claiming the company communicated an intention to manufacture consumer handsets out of a R&D facility in China. These reports are false, and include comments incorrectly attributed to a Nokia Networks executive.
Nokia reiterates it currently has no plans to manufacture or sell consumer handsets.
Nokia had stopped manufacturing devices after its devices and services business was purchased by Microsoft in April 2014 for $7.2 billion. This deal, which was announced in September 2013, included Microsoft paying EUR 3.79 billion for Nokia’s Devices & Services business and EUR 1.65 billion to license Nokia’s patents, for a total transaction price of EUR 5.44 billion in cash. Nokia’s Smart Devices business unit and the Lumia brand and products were also acquired.
This purchase was hardly a surprise. In February 2011, Nokia had entered in a partnership with Microsoft to use its Windows Phone operating system on future Nokia smartphone handsets. The company, at this point, was already failing, as CEO Stephen Elop had outlined in his Burning Man memo. The company, which at one time sold close to 28 million smartphone handsets (in December 2010), had managed to sell only 7.4 million Lumia handsets in Q2 2013. Nokia’s Windows Phone handsets also enjoyed applications by Nokia such as Nokia’s mapping service (Nokia had acquired Navteq in 2007).
Nokia Technologies is the smallest of the three business of Nokia that remained after the Microsoft buyout, other than its mapping and network equipment businesses. As of now, Nokia Technologies manages the company’s portfolio of over 10,000 patents, which were leased to MS for a period of 10 years during the buyout.
Nokia-Alcatel deal: Nokia purchased the French telecommunications equipment company Alcatel-Lucent for €15.6 billion or $16.58 billion in an all share deal earlier this month. The newly combined company said it will be looking at investing in the next generation of 5G network equipment and enabling Internet of Things. With this deal, Nokia seems to be trying to position itself as a network equipment provider, rather than a device manufacturer. The company also hinted at selling its HERE maps business at around the same time.
Nokia’s operating profits increased by 66% year-on-year (y-o-y) to €454 million in Q4 2014 from €274 million in the same quarter last year. The company had reported an operating loss of €810 million in the third quarter of 2014. The company reported a net sales of €3.8 billion compared to €3.5 billion in the same quarter last year.