Is Selling Its Smartphone Business a Bad Idea for Nokia?
Nokia Corp. (NYSE:NOK) reported third-quarter earnings on Tuesday morning as the company moves closer to selling its handset division to Microsoft Corp. (NASDAQ:MSFT) in a $7.2 billion deal expected to close next quarter. Unfortunately for Nokia, the company’s results didn’t do much to boost faith in the businesses that will remain after the Microsoft deal goes through.
Nokia’s two major businesses it will retain after the Microsoft acquisition are the company’s network and its digital mapping service called Here. Nokia showed notable declines in its network services unit, with net sales coming in at 2.6 billion euros, down 7 percent from last quarter and 26 percent year-over-year. Nokia is reportedly interested in purchasing the struggling French-American wireless company Alcatel-Lucent (NYSE:ALU) in an attempt to grow its wireless services to better compete with rival Ericsson (NASDAQ:ERIC).
Here didn’t fare much better, posting a decline in net sales of 20 percent year-over-year and a 46 percent drop in operating profit. Michael Halbherr, Nokia’s executive vice president for location and commerce for the Here business, said in an interview with The Wall Street Journal earlier this month that Nokia will be focusing on getting Here into more cars, smartphones, and businesses. “Our strategy is straight, most companies out there don’t have a map asset,” he said to the newspaper. “We have become a neutral supplier to everybody who doesn’t have their own map asset.”