I am sure by now you have seen the news that Microsoft has agreed a deal to buy Nokia’s device and services businesses for a significant €5.44bn. Nokia expects €3.2bn of that to be a gain and even expects its price per share to rise as a result.
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Most are talking about the significance to Microsoft. It couldn’t be clearer that they want Stephen Elop back to take the reins when Steve Ballmer steps down and to c
Nokia Siemens Networks logo (Photo credit: Wikipedia)
ontinue on this new path to become a devices and services company, rather than the legacy software firm we are all used to.
What I find interesting though is the future of Nokia, a company that has finally cut its losses and is going to focus on the successful part of the business – NSN (Nokia Solutions and Networks).
There has been some change within the division in recent years. Previously a joint venture by Nokia and Siemens, the latter decided to drop out of the business and focus on mobile broadband equipment, which it saw as the biggest growing segment of the networks market.
There was fear around whether the company could make it, with 17,000 layoffs expected and pressure on Nokia to give it the same attention as it was battling in the world of mobile. But after confirming the €1.7bn sale of Siemen’s 50% share in July this year, results have been strong. The most recent quarterly figures showed profits of €8m, up from a €226m loss in the second quarter of 2012.
Now Nokia has shed its struggling mobile arm and passed it on to Microsoft, which seems determined to make it work for better or worse, the Finnish company can focus its efforts on a profitable business that it fully owns and in an area where it has a chance against its competitors like Alcatel Lucent and Ericsson.
Networking might not have the glamour or grab the headlines in the same way smartphones do. But as mobile continues to grow across the globe, both for consumers and in the business world, the equipment at the back-end is going to become an even more imperative part. NSN has its place here, and a strong one at that, and I think this move is one of the most sensible Nokia has made in some years.
Chairman of the board and home-grown talent Risto Siilasmaa is now interim CEO and, although it may not be plain sailing, I think the seas to be travelled in Nokia’s future have never looked calmer.