Nokia handsets sale reveals revamped networks value

Tue Sep 3, 2013 10:59am EDT
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By Georgina Prodhan

VIENNA (Reuters) - Nokia's $7.2 billion sale of its core phones division to Microsoft leaves three disparate high-quality business units whose value should benefit from the deal.

The central operating business will now be the cleaned-up networks unit NSN - once again profitable and wholly owned by Nokia after buying out former partner Siemens - along with a mapping unit and a valuable collection of patents.

Financial analysts said on Tuesday they saw potential for Nokia's value by the sum of its parts to rise by up to 5 billion euros or 45 percent over Monday's close after shedding the loss-making handsets unit and acquiring a pile of cash.

Nokia shares were already up 36 percent at 4.04 euros by 1410 GMT on Tuesday, as hedge funds rushed to cover their short positions on news of the sale to Microsoft.

"The sum-of-the-parts valuation has been indicating for some time that the handset business was polluting the value of the other assets," analyst Richard Windsor of Radio Free Mobile wrote in a note. "Nokia shareholders are the big winners."

Wells Fargo, in a note entitled "Removing the Albatross", wrote: "We view this positively for Nokia, as we believe the path for the Device & Services business was fraught with peril given competitive forces and its limited product acceptance."

The Finnish company, once the world's dominant handset maker, had failed to close the big lead held by Apple and Samsung in the smartphone market before announcing it would sell the business to Microsoft.

Nokia had already tied the fortunes of its handsets business to Microsoft's untried Windows Phone operating software more than two years ago.   Continued...

The flagship store of Finnish mobile phone manufacturer Nokia is pictured in Helsinki September 7, 2012. REUTERS/Sari Gustafsson/Lehtikuva