By Natasha Lomas
You know times are tough when you have to sell the HQ and rent it back to raise a little capital. Well that's exactly what the once mighty mobile maker Nokia (NYSE:NOK) is doing. The company has just announced that it intends to sell its Espoo, Finland, headquarters to Finland-based Exilion and rent it back on a long-term lease. The selling price is €170 million.
Nokia said it expects the sale to be completed by the end of the year.
"We had a comprehensive sales process with both Finnish and foreign investors and we are very pleased with this outcome. As we have said before, 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. We are naturally continuing to operate in our head office building on a long-term basis," said Timo Ihamuotila, CFO, Nokia in a statement.
Nokia said it has operated the 48,000 m2 building (pictured below), which was designed by architect Pekka Helin, since 1997. The building is located in Keilaniemi, Espoo, Finland.
The HQ sale is not unexpected, as Nokia has previously confirmed it was looking at an HQ sale to raise money - albeit a price of €300 million was bandied around at that time. In its Q2 results the company said it was "re-evaluating all non-core operations" - including real estate. In October, a Nokia spokesperson told TechCrunch: "As with most companies whose core business is not in owning real estate, it makes common business sense not to tie assets in real estate property but rather invest and focus in its core operations."
Nokia is slimming its operations because its switch to Microsoft's Windows Phone platform for high-end smartphones, and away from its legacy Symbian platform, has hammered revenues - with the mobile maker posting a string of consecutive quarterly losses this year. Nokia posted an operating loss of €576 million in Q3 and almost doubling its Q1 operating loss in Q2. In its Q3 results it said it expects Q4 to be "challenging" - and noted that it had only sold 2.9 million Windows Phone-based smartphones, down from 4 million in Q2.
Nokia's cash reserves are also shrinking: net cash fell to €3.6 billion by the end of Q3, down from €4.2 billion in June.
Nokia has shuttered a number of factories, operations centres, assets and business units - and slashed its head count - since the switch to Windows Phone. In July, it confirmed the closure of its last Finnish handset factory in Salo, Finland. It has also shuttered R&D centers in Germany and Canada, as it seeks to reduce costs - hoping to save nearly $2 billion by the year's end.