Seeking Alpha

Nokia completes sale of devices and services business to Microsoft

  • Nokia (NOK) says the sale of its handset business to Microsoft (MSFT) has been completed after the companies agreed to leave two factories in India and Korea out of the deal.
  • NOK now expects the final sales price to rise slightly above the previously announced €5.44B ($7.52B).
  • Due to the ongoing tax dispute with Indian authorities which presumably was holding up the deal, NOK will operate the Chennai factory as a contract manufacturing unit for MSFT.
  • The sale ends the production of all NOK mobile phones by the former world leader, which has lost out in the smartphone race against Samsung, Apple's iPhone and cheaper manufacturers in Asia.
Comments (79)
  • joshvegas
    , contributor
    Comments (372) | Send Message
     
    So Nokia essentially still remains in phones business just as manufacturer?:)
    25 Apr, 08:12 AM Reply Like
  • gwynfryn
    , contributor
    Comments (4298) | Send Message
     
    For a while, at least. Now, does the ongoing tax argument stay with the factory, or go to the phones' new owners?
    25 Apr, 11:52 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1948) | Send Message
     
    All tax liabilities in India stay with and are limited to Nokia India. The Indian High Court stated this explicitly way back when...

     

    So New Nokia, Nokia Finland, NSN, MSFT etc are all protected.

     

    That's why Nokia's liabilities as a whole are in practice limited to the value of Nokia India's assets there. Primarily the Chennai facility to my understanding....
    25 Apr, 11:57 AM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    One thing I have been contemplating is that Nokia, if it keeps the factory, will have a way back into the phone market if it wants it. At least it will have a manufacturing plant.
    25 Apr, 03:45 PM Reply Like
  • Lekoko
    , contributor
    Comments (193) | Send Message
     
    dw -
    The game is not over till its over.
    I believe Nokia is getting a sharp person as a CEO -
    Don't be too surprised that now that the MS gang is out of the way, new things, yes, (maybe) even in breakfront smartphones may TRULY take place.
    The MS gang is now partially scrubbed out of Nokia at a very substantial cost to shareholders, and the general population of the country!
    L
    25 Apr, 07:31 PM Reply Like
  • sidiji
    , contributor
    Comments (167) | Send Message
     
    Indians should not doubt karma...nokia didn't sell the india plant and end up getting more cash...doooh!
    25 Apr, 08:13 AM Reply Like
  • La Rue
    , contributor
    Comments (751) | Send Message
     
    Lol, good one...
    25 Apr, 09:45 AM Reply Like
  • JMajoris
    , contributor
    Comments (1079) | Send Message
     
    Yes - until 2016. And then......

     

    This whole tax dispute we keep the factory thing might have just been a shrewd business move by NOK

     

    <<So Nokia essentially still remains in phones business just as manufacturer?:) >>
    25 Apr, 08:15 AM Reply Like
  • asifruman
    , contributor
    Comments (75) | Send Message
     
    Perspective!!!!
    25 Apr, 10:06 AM Reply Like
  • KevinRemde
    , contributor
    Comments (386) | Send Message
     
    I have to disagree with the last bullet-point. The race is not over. Microsoft is a DEVICES and services company, and are throwing a lot of weight into mobility and mobile devices; including the amazing work that the former-Nokia-now-Micro... employees are doing with smartphones.

     

    Disclaimer: I work for Microsoft, own MSFT stock, and absolutely love my Lumia 1020 phone and Windows Phone 8.1
    25 Apr, 08:44 AM Reply Like
  • cjaying
    , contributor
    Comments (23) | Send Message
     
    I don't work for Microsoft or own stock, but I, too, love my Lumia and 8.1.
    25 Apr, 02:06 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    I love the way my lumia duplicates and triplicates images, and downloads private pictures' thumbnails to my phone--even though I have everything about cloud turned off.

     

    Other than that, and other privacy issues, I do love the way the phone operates and it's GUI.
    25 Apr, 03:46 PM Reply Like
  • newnnly
    , contributor
    Comments (246) | Send Message
     
    I will be very interested in what they come up with now. I see MSFT and AOL are working together at the same time this Nokia deal has now been finalized. New phones and better experience. Like what I see. I've had a free dumb phone for years from my boss so I still don't have my own smart phone. Cheap B*****d basically. Me not my boss. Well I think I'll take some money and get one of the new MSFT phones. I've done good on MSFT stock so what the heck.
    25 Apr, 06:48 PM Reply Like
  • wrscomncents
    , contributor
    Comments (661) | Send Message
     
    @Kevin
    I totally agree. I'm also using 8.1 and am very impressed with how it operates. The ability to link my phone and computer automatically is extremely useful.
    27 Apr, 10:44 PM Reply Like
  • optionsgeek
    , contributor
    Comments (8) | Send Message
     
    How fortunate that NOK will retain the right to manufacture phones in about 18 months, and, remarkably, a factory that can manufacture them. What, exactly, did MSFT buy? A line of phones they themselves had heavily subsidized? A CEO they themselves had planted in NOK?
    25 Apr, 08:51 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1948) | Send Message
     
    Manufacturing is the easy part. MSFT acquired 30k skilled people who design, engineer, manufacture and sell these phones.

     

    New Nokia does not have the skilled people anymore to design and engineer great devices.

     

    India factory is a liability to Nokia and Nokia India, and will likely shutdown at some point. Due to the exorbitant and extralegal tax claims by the Indian gov, any profits Nokia India would make in future from manufacturing phones would probably be just seized by the authorities. So it does not really make any sense for Nokia India to continue operating for the long term....
    25 Apr, 09:16 AM Reply Like
  • nikomas
    , contributor
    Comments (27) | Send Message
     
    Hard to believe Seppo. They have 5 b euros, knowledge and patents. Skilled people grow up like mosquitoes. P
    25 Apr, 10:11 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1948) | Send Message
     
    Putting NSN aside, they only have money, and patents. And knowledge at the level of AT, which does not do applied engineering for manufacturing. AT does basic research but not for immediate manufacturing.

     

    Knowledge is people. Those people who know how to put the PureView lens together, and made it happen, and build it at commercial scale are now at MSFT. The people who originally conceptualized the PureView in 2005-7 might or might not be at AT still...
    25 Apr, 10:25 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1948) | Send Message
     
    Just to clarify, we have three tiers. One is the advanced research developing concepts and tech for the 5-10 year horizon. This is AT at New Nokia. And has some 1000 or so employees, big chunk of which are PhDs.

     

    Then there is engineering for manufacturing. Which is a large R&D operation for the purpose of commercialization of the AT inventions. Creating commercial products that can be manufactured at scale, and creating related processes. These people are at MSFT now.

     

    Then there is the manufacturing itself. Relatively low-skilled but still smart people at e.g. Chennai that actually build the devices...
    25 Apr, 10:30 AM Reply Like
  • optionsgeek
    , contributor
    Comments (8) | Send Message
     
    I am thinking the "extralegal" tax issue will get quickly resolved. It was transparently related to the deal and it has served it's purpose. MSFT got played.
    25 Apr, 11:07 AM Reply Like
  • gwynfryn
    , contributor
    Comments (4298) | Send Message
     
    Maybe you can tell me Sep; does the tax issue belong to the factory, or to the phone producer? Or does it remain the same thing in this case, though MSFT will own the product from Chennai?
    25 Apr, 11:55 AM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    Seppo,

     

    If the Indian Authorities do that, there is no reason at all to keep it open. I'd simply just tell them to "FO" and shut it down the same day.
    25 Apr, 03:48 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    I have to agree with Seppo. Nokia is out of the phone business, even if they retain a manufacturing plant. I'm thinking that as soon as MS gets up and running, the Indian plant is history. The Indian tax Authority guaranteed that.
    25 Apr, 03:50 PM Reply Like
  • Lekoko
    , contributor
    Comments (193) | Send Message
     
    Please don't trivialize manufacturing. Engineers and scientists are important, yes, but w/o great manufacturing skill, things can come to a prompt end.

     

    Nokia has the ability to hire many of the same people in the R&T world that Elop fired, from closed research labs, engineering centers, etc.

     

    As to OSs - Ability to recreate great ones by bringing in some of the coders and enterprising guys to put together systems that evolve into giga-ecosystems in short time is really possible - BUT impossible under the Elop regime for many reasons.
    L
    25 Apr, 07:47 PM Reply Like
  • Randal James
    , contributor
    Comments (2751) | Send Message
     
    I think the Chennai unit will be sold to Jerry Jones.

     

    Dallas may not be the powerhouse it once was, but everyone knows the Cowboys don't take crap from the Indians.

     

    [Sorry Seppo, that's an American football/western mythology lampoon.]
    25 Apr, 10:10 AM Reply Like
  • sidiji
    , contributor
    Comments (167) | Send Message
     
    cash burn just stopped...such a deafening silence.
    25 Apr, 10:35 AM Reply Like
  • Mking30
    , contributor
    Comments (139) | Send Message
     
    IM intrigued at our direction, still buying... MegaLong
    25 Apr, 11:13 AM Reply Like
  • La Rue
    , contributor
    Comments (751) | Send Message
     
    Bookkeeping department can now change ink colors from red to black, green for me :)
    25 Apr, 11:13 AM Reply Like
  • alphaRAJU
    , contributor
    Comments (437) | Send Message
     
    Very colorful La Rue!
    26 Apr, 12:35 AM Reply Like
  • newnnly
    , contributor
    Comments (246) | Send Message
     
    Yeah alphaRAJU that's a horse of a different color! A GIFT HORSE!
    27 Apr, 08:44 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    It doesn't matter if they announce a 100 trillion dollar operating margin QQ, the price will still fall--for strange and sophistical reasons, we know not what!
    28 Apr, 07:18 PM Reply Like
  • Timothy Bryan
    , contributor
    Comments (757) | Send Message
     
    It is about time....
    25 Apr, 11:45 AM Reply Like
  • 11146471
    , contributor
    Comments (756) | Send Message
     
    What will NOK produce now? What is their current business model?
    25 Apr, 12:21 PM Reply Like
  • sidiji
    , contributor
    Comments (167) | Send Message
     
    New Nokia will likely have $1.5-$2.0B in annual free cash flow from NSN and $2-$3+B in annual free cash flow from the licensing business in just a few years. That's $3.5 to $5+B in annual free cash flow (and a $15-$20B revenue base) from a starting $10B cash position (net of debt, ~$15B revenue base) as of today..
    26 Apr, 03:03 PM Reply Like
  • La Rue
    , contributor
    Comments (751) | Send Message
     
    The answers come Tuesday in the CC.
    25 Apr, 12:27 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    Like I said all along--the deal will close, and SP will fall. I am so good. And, more importantly, Nokia SP so predictable!

     

    I hope on Tuesday, if Timo speaks, the new CEO tells him to "Shut your Pie Hole, Timo; I'm the CEO now."
    25 Apr, 03:53 PM Reply Like
  • Robert81
    , contributor
    Comments (2) | Send Message
     
    @dwdallam
    Hi, I have a genuine question for you. Can you tell a beginner like me, how did you predict that the SP falls? I was in the belief that it goes up. Closing the deal was the least of the worries for the investors? I am too scared to hold over the earnings, gave up and sold all shares, might regret after tuesday.
    25 Apr, 05:12 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    Robert,

     

    I was jesting, but Nokia has gone down on good news over and over, but it always bounces up again into its current range, whatever that is. I had a 50/50 chance of being correct.

     

    Currently, there is no way to predict, even probability wise, what Nokia will do in the short term. Long term, there is some upside. And with mergers or buyouts, there could be some very good upside. It's a long play, unless you are trading its volatility in a current range.

     

    Second, everything has been baked into Nokia, such as it's cash infusion from MS and this year's revenue income. There could be surprises, but other than that, everything is pretty set for the next 3 QQs.

     

    Current targets are from around $7.50 - $11.00 for the year.

     

    The exception, in my opinion, is if Nokia announces Tuesday the reinstatement of a dividend. IF that happens, AND the forward looking guidance is positive, then fund managers may want to buy in. If large funds decide to buy, then there could be substantial upside after the announcement.

     

    Other than that, if you want to make money on Nokia, it's either a long play, or a ranged trading system.
    26 Apr, 03:14 PM Reply Like
  • Timothy Bryan
    , contributor
    Comments (757) | Send Message
     
    dwd,
    yes indeed, Timo needs to have his pie hole taped shut for the whole cc...
    25 Apr, 04:01 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    Timo's accessory for Tuesday:
    http://bit.ly/1rxlnFD
    26 Apr, 03:17 PM Reply Like
  • Tattoo123
    , contributor
    Comments (16) | Send Message
     
    Isn't Timo technically gone to Microsoft as of last Thursday?
    26 Apr, 04:16 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1948) | Send Message
     
    @tattoo No. Timo is Nokia's CFO and stayed with Nokia.
    26 Apr, 06:01 PM Reply Like
  • Randal James
    , contributor
    Comments (2751) | Send Message
     
    Seppo, is this a different Timo?

     

    "As previously announced, the following Nokia leaders have stepped down from the Nokia Leadership Team and transferred to Microsoft at closing, effective April 25, 2014: Stephen Elop, Jo Harlow, Juha Putkiranta, *Timo Toikkanen*, and Chris Weber. "
    26 Apr, 06:24 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1948) | Send Message
     
    Usually people here refer to Timo Ihamuotila, who is the CFO. He is also the interim President and his performance in the Q4 CC was anything but convincing, so that's why the acrimony...

     

    http://seekingalpha.co...
    26 Apr, 06:31 PM Reply Like
  • Tattoo123
    , contributor
    Comments (16) | Send Message
     
    Sorry, wrong Timo! Please keep acrimonyzing...
    26 Apr, 09:00 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    Where he should stay in his office until noon Wednesday.
    27 Apr, 04:57 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    Seppo

     

    "his performance in the Q4 CC was anything but convincing, so that's why the acrimony"

     

    You are such a nice guy. I could find so many other adverbs and adjectives to describe his announcement performance last announcement.
    27 Apr, 04:58 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    He needs to have it sewn shut.
    28 Apr, 07:19 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    Also knows as "Timo The Share Price Killer"
    28 Apr, 07:21 PM Reply Like
  • La Rue
    , contributor
    Comments (751) | Send Message
     
    Send him to Oulu for the day :)
    25 Apr, 04:27 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2417) | Send Message
     
    I think that most of the commentators above fail to understand what CAN happen in India and the many possible unintended consequences.

     

    I'm out of Nokia because I can not get a handle on possible risks

     

    good luck to all
    25 Apr, 04:39 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1948) | Send Message
     
    Regarding risk management, it the courts have been clear that the tax demands are limited to Nokia India. And the High Court has been explicit about that. The tax man wanted the courts to expand the liability to Nokia Group, but the High Court said no.

     

    Now, it is of course true that these charges in the first place are based on retroactive taxation, dubious/false interpretation of international tax laws, explicitly disregarding the special tax treaty Tamil Nadu had in place for Nokia and other multinationals, and in the case of demands (second tax case from last month) by Tamili Nadu? not even based on simplest facts on the ground.

     

    So the Indians certainly have the ability to come up with whatever they like. So there is a risk that the courts or the gov does whatever it likes, e.g. seizing NSN or Nokia Group or even MSFT property. That risk exists, but I would consider that relatively limited. Of the three branches of government the courts and particularly the High Court is the most functional/least corrupt so I still some faith in them. So materially the India tax case risk should be contained to Nokia India going BK.

     

    Now, the authorities/gov might try to retaliate against NSN, which considers India as major market. This would of course be illegal, but certainly a possibility. On the other hand my assumption is that the deals NSN will be making are with private telecom corps, so they do not care about Nokia India. They just want the best deal....

     

    Beyond that I do not see other risks of the top of my head for Nokia regarding the India tax case...

     

    Any thoughts anyone?
    25 Apr, 06:24 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2417) | Send Message
     
    seppo

     

    I could be 100% wrong but while I agree with you on the tax being Nokia india's problem, My understanding is the manufacturing infrastructure can be put on hold until the tax question is solved and under their labor laws you must continue to pay staff. Should this be true, the contract manufacturing is out the window, the overall assets are not worth zero,
    and they have to pay very high premium to get rid of the staff. If this worse case should be accurate it is going to be painful to those who own
    Nokia. I might sound chicken little and do not have the right info but
    I do know when to fold and good luck to those who hold.
    25 Apr, 07:00 PM Reply Like
  • Randal James
    , contributor
    Comments (2751) | Send Message
     
    NYC

     

    The assets are tied to Nokia India, which is whatever onhand cash they have in the bank, the parts, supplies and the factory itself. Nokia (Fin) can hand the tax authorities the keys and leave. What they are asking for is far more than the value of the assets themselves. Why bother?

     

    I agree with Seppo that such a move would antagonize the bureaucrats at the tax authority and they might try to harm future NOK activities in India, a significant player in the developing world. Even if such activities are irresponsible it doesn't mean that a winnable contract might be steered away from Nokia's nose to ALU or Huawei. That's exactly what happened in China with homegrown firms getting the lion's share of all the business despite NOK winning in competitive bidding.

     

    I'm just cynical enough to wonder if this whole maneuver wasn't designed specifically to get Nokia to beat a retreat from the Indian marketplace. India has really low disposable incomes per person so as they modernise their system to handle smartphones, the bulk of those sales are going to be on the inexpensive side, much like the NOK 521 or the newer Android version. Nokia WAS the #2 producer of phones worldwide until just hours ago and the volume was all in low-end devices.

     

    India has several small start-ups hoping to become the Indian version of Samsung. They aren't building anything that will challenge the iPhone as yet but should move millions of cheap devices. It would be a lot easier for them to grow and develop if inexpensive phones from Microsoft/Lumia were not on the shelves. Better still, if Nokia runs out because of this bizarre tax demand, what are the odds they or Microsoft will come back with phones again?
    26 Apr, 01:19 AM Reply Like
  • nikomas
    , contributor
    Comments (27) | Send Message
     
    Indian CEO!!!!
    26 Apr, 08:51 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2417) | Send Message
     
    R JAMES
    I appreciate your input but my real question is on the labor side. it seems it could be a black hole. Under some treaties there is recourse to the home countries as such I'm clueless so I folded my position.
    26 Apr, 01:00 PM Reply Like
  • sidiji
    , contributor
    Comments (167) | Send Message
     
    if that happens, Nokia India runs out of operating cash and goes BK, which is prob where its headed...that's up to the tax thug Indians who have epically failed in their blackmail effort..

     

    Nokia Finland parent has said quite firmly it WILL NOT support the sub further or open itself up to any liability belonging to the sub. FYI there is no way for the Indians to reach the parent without Nokia Finland willingly assuming the sub's liabilities...this was precisely what the courts wanted from Nokia Finland and Nokia said go stuff it...which is why the plant never transferred. There is no further liability....god im getting tired of having to keep saying this.

     

    The sub is a completely separate entity...a limited liability corp. The Indians have claimed the moon and the stars, but in the end all they have is the plant which is the sub's only asset.
    26 Apr, 03:14 PM Reply Like
  • sidiji
    , contributor
    Comments (167) | Send Message
     
    We've had this discussion before, there are repercussions if the Indians decide to discriminate against Nokia Finland without cause...its called a Trade War...and trust me, the EU has a lot more leverage if it comes to that.
    26 Apr, 03:16 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    NYC

     

    I can surely see your point, from where you come from investing. A wise decision based on your investing model, for sure.
    26 Apr, 03:18 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    Seppo,

     

    One thought. If the High Court in India does decide to go after Nokia Group, what can they do? If Finland high Court says, "Stuff it!" then the only thing India can do is seize the factory--good for them, they slit their throats and shoot themselves in the face at the same time.

     

    I'm assuming there is no world court that would be the final say in the matter. I'm assuming after the Indian High Court has its say, they would appeal to Finland courts, and if Finland says "sorry" the story ends there?
    26 Apr, 03:22 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    NYC

     

    Again, Nokia India is it's own entity. They can BK Nokia India, but big deal. India doesn't have any power over a Finnish located corporation. Anyway, that's my understanding. I'm seeing it as an LLC, where you can take the assets of the LLC, but not the owners personal assets.
    26 Apr, 03:24 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    Nik

     

    WHO LEFT INDIA TO WORK IN FINALND!
    26 Apr, 03:26 PM Reply Like
  • sidiji
    , contributor
    Comments (167) | Send Message
     
    India cannot afford a trade war against the EU, and that's what will happen if they try to discriminate against Nokia Finland. India has extensive assets in Europe, not least all those swiss bank accounts belonging to the governing officials.

     

    The economic repercussion has already begun, report just out says Indian telecom export just collapsed 40% as a direct result of their attack against Nokia's Indian subsidiary...which was a major exporter of feature phones abroad.

     

    I still cant get my head around how stupid the Indians have acted...they've destroyed their reputation and got exactly....zero for their efforts...
    26 Apr, 03:26 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    NYC

     

    I see your problem now. This is a good question. However, using some deduction, I doubt Nokia counsel would have told Indian Tax Authorities to stuff it if they thought India had recourse, as you have stated it.

     

    The real question is "Does India have any recourse over Nokia Assets, outside of Nokia's Indian assets?"

     

    And the answer has been "no."

     

    But you are correct to dig into that question.
    26 Apr, 03:32 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2417) | Send Message
     
    SIDIJI

     

    I think you fail to realize counties have tax treaties. As an example you can sue in the home country for certain labor actions in a sub in Asia. UK, US and France just to name a few. I have no knowledge of the various treaties signed by Finland but if they have the EU will push that the treaty is upheld so Nokia could be holding the short straw.
    26 Apr, 04:07 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2417) | Send Message
     
    dwdallam

     

    You are thinking like an individual or corporation against another corporation in a civil action. This is a government going after a corporation.
    Governments have treaties between each other on how things will be handled. Assume you have a LLC in the USA And the head owners are in Switzerland and you provide money laundry services to American Citizens. ASK UBS OR Credit SUISSE can UNCLE SAM reach out and touch them in Switzerland.
    26 Apr, 04:18 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2417) | Send Message
     
    dwdallam

     

    You have to remember for each court case that is decided the losing side's counsel basically told the other side to stuff it only to get their ass kicked.

     

    the world court many times solves problem between counties.

     

    Right now the country of Argentina has a case before the US Supreme Court and are claiming a number reasons not to pay their old bonds including sovereignty. I follow it a bit because the other side is a couple of hedge funds.

     

    26 Apr, 04:36 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2417) | Send Message
     
    This could take years to solve but it keeps the lawyers happy.
    26 Apr, 04:39 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7981) | Send Message
     
    NYC

     

    Both comments good information. Thanks. The bottom line, I think, is that the original contract will be looked at, either by Finland, if it goes that far, or the World Court. If Nokia is above the line, then too bad for India. And it seems that since India is pushing this, they would have appealed to Finland or the World Court by now, since Nokia has already told them "no deal."

     

    And, if Nokia really does owe this ridiculous number, then Nokia has been lying about it's responsibilities--not something the company is known for.
    26 Apr, 05:10 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2417) | Send Message
     
    dwallam

     

    I think Nokia will win and I don't trust the Indian judiciary.
    The biggest mistakes I have seen in trials, it's like in Medicine
    you need a specialist rather than a generalist. I my early life I personally have had to explain margin rules to lawyers who are personal injury lawyers but have no clue to securities laws. They were smart people
    but never followed the changes.
    26 Apr, 05:52 PM Reply Like
  • sidiji
    , contributor
    Comments (167) | Send Message
     
    You fail to understand that Nokia India and Nokia Finland are two separate companies.
    26 Apr, 08:11 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2417) | Send Message
     
    sidiji

     

    you fail to realize under certain circumstances governments can and do
    treat them as one entity. One example that I mentioned in an above comment
    Governments have treaties between each other on how things will be handled. Assume you have a LLC in the USA And the head owners are in Switzerland and you provide money laundry services to American Citizens. ASK UBS OR Credit SUISSE can UNCLE SAM reach out and touch them in Switzerland.
    26 Apr, 08:25 PM Reply Like
  • Timothy Bryan
    , contributor
    Comments (757) | Send Message
     
    NYC,
    I think we get your point, but it is rather ridiculous to insinuate that the cases of evasion that were prosecuted by the US in relation to money laundering were anything other than a matter of the huge leverage the US holds over the international financial system, as well as the facts on the ground that proved so detrimental to UBS and Credit Suisse-- rather than an equivalent to the Nokia case.
    India holds zero leverage, and the facts show no indication of illegal behavior. It is a simple money grab by a corrupt system, and anyone with a 4th-grade education can see that for the truth it is.

     

    In sum: India has no leverage and no factual basis for their tax stupidity, and nowhere to go when Nokia hands them an empty factory that nobody wants.
    26 Apr, 08:40 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1948) | Send Message
     
    @NYC I see your point, and it is a valid one. But as I implied earlier, this kind of risk borders to incalculable. You understandably decided to bail out due to this. My risk assessment on the other hand is that the scenario you contemplate is not relevant enough at the moment for me to bail out. But I do see your point. The Indian tax case is a hot mess, and everyone has to do their own risk assessment.

     

    Now, regarding tax treaties, Finland and India do have a bilateral tax treaty in place. According to this treaty, and according to Finnish tax authorities and Finnish international taxation experts, Nokia Finland should and has already paid the taxes in question. Finnish gov officials have visited their counterparts in Inida in order to discuss the case, but this did not have any effect.

     

    Basically the first (and larger) Indian tax claim is a violation of the Finnish-Indian tax treaty, and also is contrary to general international laws regarding transfer taxes, where apparently it is the receiving country (Finland) that has the right to tax. I am not a tax expert, but that's what I have read in various articles.

     

    With that, this whole case is casting India in a bad light, and as @sidijii speculates, if India continues to enforce or escalate this kind of violation of treaties, perhaps EU might also get more involved...

     

    You also raised the question of laying off staff at Chennai and related labor laws. I am not an expert in such issues/legislation. All I know is that Nokia (being a Finnish company, coming from a county of strong social equality norms) has very generous termination/retirement package/programs in place. And they have just said that these benefits will be available to Chennai and Masan employees. These benefits are I would guess much better than in general most Indians could ever dream of. So anyone arguing that these people are mistreated, is on a shaky ground. But as we have seen already, anything is possible with countries like these....
    26 Apr, 08:45 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1948) | Send Message
     
    Here's some info on Nokia's Bridge program:
    http://tcrn.ch/1b5zwSf

     

    And this is the related excerpt from the D&S sale press release:

     

    "...Amid the uncertainty for our employees in Chennai and because of the planned closure of our facility in Masan, Nokia plans to offer a program of support, including financial assistance which would give our employees the chance to explore opportunities outside Nokia starting from a sound financial base. The company plans to bring to Chennai and Masan elements of its Bridge program, which we have made available for employees affected by company changes in other sites...."

     

    http://nokia.ly/1pD3ZBW
    26 Apr, 08:54 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2417) | Send Message
     
    TIM

     

    I was talking about the labor problems and requirements of closing the plant. look at what you need to do in France and Germany
    26 Apr, 09:43 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2417) | Send Message
     
    seppo

     

    Thank you for you comments
    26 Apr, 09:45 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2417) | Send Message
     
    seppo

     

    Thanks for this info
    26 Apr, 09:46 PM Reply Like
  • La Rue
    , contributor
    Comments (751) | Send Message
     
    Well said Seppo.....
    25 Apr, 06:30 PM Reply Like
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