Nokia to Sell Finnish Headquarters to Improve Profit
Nokia Oyj (NOK1V) agreed to sell its headquarters as the struggling Finnish mobile-phone maker works to improve profitability by divesting assets.
Nokia agreed to sell the 48,000 square-meter (517,000 square-foot) glass building overlooking a lake in Espoo, Finland, for 170 million euros ($222 million) to Exilion Capital and start a long-term lease, it said in a statement today. The company is focusing on winning back smartphone users from Google Inc.’s Android devices and Apple Inc. (AAPL)’s iPhones as it divests assets as part of a turnaround plan.
Nokia sold its Vertu luxury-phone unit to Swedish private- equity firm EQT Partners in June and agreed to sell its Qt app- tools unit to Digia Oyj in August.
“Owning real estate is not part of Nokia’s core business and when good opportunities arise we are willing to exit these types of non-core assets,” Chief Financial Officer Timo Ihamuotila said in the statement. “We are naturally continuing to operate in our head office building on a long-term basis.”
Chief Executive Officer Stephen Elop said the fourth quarter will “continue the transition” as Nokia moves to devices based on Microsoft Corp.’s Windows software.
Nokia’s net cash fell to 3.6 billion euros in the third quarter from 4.2 billion euros at the end of June. Its cash reserves have shrunk by about half in the past five years and will drop below 3 billion euros by year-end, Standard & Poor’s estimated in August. Nokia’s debt is at junk status with the three main rating companies.
Nokia shares climbed 1 percent to 2.54 euros at 4:27 p.m. in Helsinki, paring two days of decline. The stock has fallen 33 percent this year, giving the company a market value of 9.52 billion euros.
Nokia Siemens Networks, the phone-equipment venture of Nokia and Siemens AG, is stepping up efforts to reduce costs as the global network-gear market is shrinking amid phone operators’ spending cuts.
Nokia Siemens will announce the closing of a German services unit tomorrow, with as many as 1,000 jobs lost, after failing to renew a contract with Deutsche Telekom AG, two people familiar with the matter said.
The venture will close the unit after it failed to extend a five-year contract to service Deutsche Telekom phone cables, and the announcement will be made tomorrow at a staff meeting in Kassel, Germany, said the people, who declined to be identified as the plans aren’t yet public.
To contact the reporter on this story: Adam Ewing in Stockholm at firstname.lastname@example.org