Addressing Nokia Oyj
Might Microsoft Corp
For Microsoft the relationship is important, because Nokia was its first major break into the smartphone market after a decade of heavy investment. During that period other cellphone makers either chose to use their own software – as did Apple – or favoured Google Inc's
“If Nokia ends up in financial difficulties I believe the helping hand would be there,” said Sami Sarkamies, an analyst at Nordea.
Nokia and Microsoft declined to comment.
Microsoft is already paying Nokia $1 billion a year to use its software on Lumia smartphones. And investment bankers familiar with the technology sector said the support could extend well beyond that amount, if Nokia's problems intensify.
“I don't see Microsoft owning Nokia, but it would definitely provide financing to the tune of a couple of billion dollars,” said one veteran technology banker.
Any Microsoft support for Nokia would be more likely to take the form of an inter-company loan, or an equity stake, rather than a full takeover, a second banker said. Even though Microsoft has nearly $60 billion of cash on its balance sheet, the company has traditionally steered clear of the hardware business, because it does not want to compete with the manufacturers that use its software. Yet other priorities may override that consideration.
A match made in heaven?
At the same time, some bankers said they thought Nokia, which has a market value of 9.3 billion euros, was an unlikely target for other cellphone manufacturers because of its deep integration with Microsoft.
“I don't see it as a target for private equity either. It is still too expensive and too volatile,” said a third banker. “You would have to be prepared to catch a falling knife.”
With a full takeover of Nokia seeming unlikely, some bankers and analysts were equally sceptical about asset spin offs as a way for the company to raise some much-needed liquidity. Nokia is in talks to sell its British luxury subsidiary Vertu, which makes some of the world's most expensive mobile phones, a source familiar with the company's strategy told Reuters previously. Yet Vertu is expected to generate only a few hundred million euros if it is sold to private equity firm Permira. And bankers said Goldman Sachs' mandate to sell the business did not extend to any other Nokia assets.
“Banks are pitching ideas to them like they always do, but I'm not aware of any other mandates to sell Nokia businesses or any wider mandate to advise the company on options,” the first source said.
Nokia's other assets that could be of interest to potential buyers include its intellectual property portfolio, which a fourth banker described as “the best in the industry”. Yet Elop told the company's shareholders' meeting on May 3 he was not planning any wider patent sales. He also said he saw the location and mapping business, built on the $8.1 billion acquisition of U.S. firm Navteq, as a core asset the firm would aim to keep, despite some expectations it could be sold.
The fourth banker said Microsoft was likely to urge Nokia not to put its patents on the block in any case, because it would not want them to fall into the hands of Google. The only other asset of any size that Nokia could potentially sell would be its half of Nokia Siemens Networks (NSN).
Yet its parent companies Nokia and Siemens
“Elop was not hired as a boss for a burning platform,” said John Strand, founder and CEO of Danish consultancy Strand Consult. “He put the platform on fire.”
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