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Nokia looking to re-enter mobile phone biz in 2016, confirms CEO Rajeev Suri

Nokia X Family

Nokia is indeed planning on returning to the mobile phones business in 2016, after its contract clause with Microsoft preventing it from using its brand name on handsets expires, Nokia CEO Rajeev Suri told the German language publication Manager Magazin. Suri told the publication that Nokia will simply design the phones and subsequently make its brand name available to be licensed.

It’s worth noting that Nokia has adopted a similar approach for its N1 tablet, which was launched in China earlier this year and later extended to Taiwan. Nokia is likely to license its brand name and industrial design for smartphones, similar to what it has done with the N1 tablet. The Original Equipment Manufacturer (OEM) partner it signs up with will also likely to be responsible for the distribution and sales of the smartphones. Nokia’s contract clause with Microsoft expires in Q4 2016.

Interestingly, in April this year, Nokia had said that “it currently has no plans to manufacture or sell consumer handsets,” after Re/code reported that Nokia was planning to return to the consumer mobile market by the end of 2016. This essential remains accurate, because Nokia won’t be directly manufacturing or selling smartphone.

Nokia-Alcatel deal: Nokia purchased the French telecommunications equipment company Alcatel-Lucent for €15.6 billion or $16.58 billion in an all share, in April this year. 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.

Financials

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Nokia’s operating profits declined by 13% year-on-year (YoY) to €265 million in Q1 2015 from €305 million in the same quarter last year. The company had reported an operating profit of €524 million in the previous quarter. The company reported net sales of €3.2 billion in Q1 2015, as compared to €2.7 billion in the same quarter last year.

Nokia Networks was the worst performing among the three major businesses Nokia has left post the sale of its devices and services business to Microsoft, in April last year. Nokia Networks’ operating profit was down 61% YoY to €85 million from €216 million in the same quarter last year. On the other hand, HERE posted operating profits of €19 million, up 90% YoY, and Nokia Technologies posted operating profits of €193 million, up 124% YoY.

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