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Nokia (NOK) confirms it's buying Siemens' (SI) 50% stake in Nokia Siemens. The price is...

Nokia (NOK) confirms it's buying Siemens' (SI) 50% stake in Nokia Siemens. The price is €1.7B ($2.21B); Nokia will pay €1.2B in cash (via bank loans), and a €500M loan from Siemens due a year after the deal's closing (expected to be in Q3). NSN's current management/governance structure will be maintained. Also: Nokia estimates it closed Q2 with gross cash of €9.2B-€9.7B and net cash of €3.7B-€4.2B, down from €10.1B and €4.5B at the end of Q1; if the deal were to have closed in Q2, net cash would be at €2B-€2.5B. (Bloomberg report)
Comments (12)
  • Stock Market Mike
    , contributor
    Comments (1858) | Send Message
     
    Cash position weakens, but profitability should improve. Carriers and ISPs are in the network upgrade phase right now, until at least part way through 2014. It's the ideal time to take full control of those NSN profits. Awfully nice of Siemens to delay receiving some of the payment for a full year. (The agreed price is also absurdly low!)

     

    I'm no expert analyst, but I couldn't dream of better conditions or a better outcome. This is exactly what I hoped for!
    1 Jul 2013, 01:39 AM Reply Like
  • Timothy Bryan
    , contributor
    Comments (707) | Send Message
     
    Sweet!
    1 Jul 2013, 01:55 AM Reply Like
  • TapaniP
    , contributor
    Comments (9) | Send Message
     
    I think this is a very good move from Nokia. In electronic sector Nokia started in telecommunications about 50 years ago and now they are strengthening their roots and long term core competencies.

     

    From competition point of view this is also a good move. In networks the entrance barrier to business is much more higher than in mobile phones and there are much less players than in mobile phone sector.

     

    After the deal Nokia ´s position is solid. The decision making inside the company is easier and the direction is clearly in Nokia `s hands.

     

    The price sounds also very reasonable compared on the value of NSN that the analysts have lately indicated.

     

    In addition there are always some synergies between the networks and the terminal devices. Nokia is for sure closely following and contributing the future standards and regulations that drive the way of new networks and new device technologies. Nokia has a research function, which is capable to do this job from both perspective.
    1 Jul 2013, 02:16 AM Reply Like
  • zedovski
    , contributor
    Comments (3) | Send Message
     
    This shows that the company has confidence in its core businesses to be considering using up its cash reserves. Perhaps Lumias are selling on track or better than expected, esp since BBerry, Apple and Samsung are appearing weak - that means someone must be taking share and the only suppliers I can think of are Nokia and htc.
    1 Jul 2013, 02:59 AM Reply Like
  • bzz
    , contributor
    Comments (15) | Send Message
     
    Very good news ! I don't think they would make this deal if the phone division was not recovering . We might see 10 mil Lumia sold . I would not be surprised if this stock goes 10-12$ by the end of the year . All the pieces are in place now . Fasten your seat belts and enjoy the ride ! Long NOK !
    1 Jul 2013, 03:05 AM Reply Like
  • mr wonder
    , contributor
    Comments (541) | Send Message
     
    Imho this is great for NOK shareholders and a great catalyst moving forward:

     

    1. Nokia is increasing their stake into a 7% profitable business without having the normal risks off acquiring new businesses.
    2. Nokia is not dependent on Siemens to do an IPO and a 100% IPO is more valuable than a 50% sale.
    3. Nokia's possibility to implement an IPO any time they want enables Nokia to offset any further restructuring risk at D&S.
    4. The price for Siemens part is very good, 1.7B instead of its estimated value ~3.5B

     

    As a bonus, both 1, 2, 3 and 4 most likely will increase Nokia's credit rating at once.
    1 Jul 2013, 03:31 AM Reply Like
  • Kamminga
    , contributor
    Comments (186) | Send Message
     
    I recall that last year it took Nokia 10 seconds to raise $1b from banks. The banks now sub this deal again. Clearly it's not just Nokia itself that has confidence in its future....
    1 Jul 2013, 06:15 AM Reply Like
  • Charles Santerre
    , contributor
    Comments (1242) | Send Message
     
    Very good, but net cash decrease worries me. I expected increase.
    1 Jul 2013, 08:07 AM Reply Like
  • Joeriii
    , contributor
    Comments (197) | Send Message
     
    maybe it decreased because of the 3million lumia 1020's

     

    http://bit.ly/129pgS5
    1 Jul 2013, 08:22 AM Reply Like
  • beyond dreams
    , contributor
    Comments (185) | Send Message
     
    @Charles,
    Everything about the NSN deal is excellent, however, just like you the net cash decrease has me very concerned. Lets hope that the decrease is due to severance paid to employees.
    1 Jul 2013, 10:30 AM Reply Like
  • Charles Santerre
    , contributor
    Comments (1242) | Send Message
     
    bd, does the reason behind net cash decrease matter? Not to me. It only means 0 profit or worse in Q2!
    2 Jul 2013, 07:08 AM Reply Like
  • Cuddyal
    , contributor
    Comments (5) | Send Message
     
    Happy with this news.Not happy when you go to Radio Shack and Best Buy and see no Nokia Window Phones on display or. being sold.I talked to the sales clerk and the general public isn't buying the Window/OS and there's not alot of intrest right now.My biggest intrest is what the stock going to do as it near the next earning date. Anyone been to a Verizon store and cheched out and talk to the sales clerks on how the phones and what they have on display?
    1 Jul 2013, 09:51 AM Reply Like
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