Is Juniper The Next Takeover Target?
Chris DeMuth Jr. • 64 Comments
Chris DeMuth Jr. • 64 Comments
Sep. 14, 2015, 9:51 AM
- Three months after the DOJ signed off on the Nokia's (NOK +1.8%) merger with Alcatel-Lucent (ALU +1.7%), the Committee on Foreign Investment in the United States has done so.
- EU regulators have already approved the deal, which is still expected to close in 1H16. A JV has been launched with China's Huaxin to help secure Chinese regulatory approval.
- Separately, Goldman's Alexander Duval has upgraded Nokia to Conviction Buy, and set an €8.70 ($9.50) target. He expects strong merger synergies, and thinks major post-merger capital returns are possible.
- Duval: "[W]e see scope for margin improvement given industry consolidation, while Nokia should have a competitive advantage vs. Ericsson given its converged portfolio. Moreover, Nokia’s management has a strong track record in cost control, underpinning our confidence in its synergy target. Finally, we see scope for sizeable capital returns following the deal. In this context, we view the current PF 9x 2018E EPS (6x ex-cash) as attractive..."
Sep. 1, 2015, 11:10 AM
- French cable giant Altice (OTCPK:ATCEY) is the confirmed next stop for Michel Combes, who's leaving his post as CEO of Alcatel-Lucent (NYSE:ALU) to become Altice's chief operating officer.
- Combes will also be chairman of the board at Altice's Numericable-SFR combination.
- He had been on his way out at Alcatel-Lucent as it proceeds through a €15.6B takeover by Nokia, with Chairman Philippe Camus taking over in an interim role.
- Combes has been chief of Alcatel-Lucent for the past two and a half years; prior to that, he had served at Vodafone Europe as CEO and at Orange as CFO.
Aug. 28, 2015, 11:09 AM
- Nokia (NYSE:NOK) will create a joint venture with China Huaxin that may clear the biggest remaining jurisdiction and win it China's approval in a €15.6B takeover of Alcatel-Lucent (NYSE:ALU).
- Nokia will hold 50% plus one share of the Nokia Shanghai Bell JV. The deal is similar to a longtime JV between Alcatel-Lucent and state-owned Huaxin, which presages a green light for the takeover.
- The EU had given approval to the deal late last month, and the U.S. Justice Dept. OK'd it in June.
Aug. 26, 2015, 5:35 PM
Aug. 10, 2015, 2:47 AM
- Nokia (NYSE:NOK) is hiring software experts, testing new products and seeking sales partners as it plots its return to the mobile phone and consumer tech arena.
- Learning from the mistakes of its past, Nokia is looking to re-enter the market through brand-licensing, whereby it will design new phones bearing its brand, but will then allow other firms to manufacture and sell the devices.
- The Finnish group still must wait until late 2016 before re-entering the business - after a non-compete deal with Microsoft expires.
- Previously: Nokia looks to re-enter mobile business (Jul. 14 2015)
Aug. 3, 2015, 1:57 AM
- A consortium of German carmakers, including BMW (OTCPK:BAMXY), Daimler (OTCPK:DDAIY) and Audi (OTCPK:AUDVF), have agreed to buy Nokia's (NYSE:NOK) maps business HERE for an enterprise value of €2.8B ($3.07B), as they look to extend their reach into digital services for connected cars.
- The sale will also help Nokia focus on integrating its €15.6B purchase of Alcatel-Lucent, a deal that will create the world's second largest network equipment maker.
- Previously: Bloomberg: Nokia close to HERE maps unit sale (Jul. 21 2015)
Jul. 30, 2015, 12:20 PM
- Nokia's (NYSE:NOK) Q2 revenue of €3.21B (+9% Y/Y, $3.51B) missed a €3.29B consensus. However, EPS of €0.09 ($0.10) beat a €0.05 consensus. Merger partner Alcatel-Lucent's (NYSE:ALU) Q2 revenue of €3.45B (+5% Y/Y, $3.76B) missed a €3.53B consensus, and EPS of -€0.02 (-$0.02) missed a €0.00 consensus. However, expectations were low on account of soft global telecom capex.
- Nokia's core Networks unit had Q2 revenue of €2.73B, +6% Y/Y. The HERE mapping/navigation unit (on the block) had revenue of €290M (+25%), and the Technologies IP licensing unit revenue of €193M (+31%). HERE/Technologies growth helped gross margin rise 270 bps Y/Y to 46.7%. Op. margin rose 440 bps to 16.2%.
- Nokia forecasts Networks, HERE, and Technologies will all see 2015 revenue growth, and that Networks op. margin will be near the midpoint of an 8%-11% long-term target range. The 2015 capex budget is at ~€250M.
- In spite of its EPS miss, Alcatel posted free cash flow of €65M (€158M excluding restructuring costs), the first time it had positive Q2 FCF since the 2006 Lucent merger. A 220 bps Y/Y increase in gross margin to 34.8% (aided by cost cuts and a mix shift towards software) helped out.
- Alcatel's Core Networking segment was strong in Q2, with sales rising 22% Y/Y to €1.68B (+10% exc. forex). Within the segment, IP routing revenue rose 17%, IP transport (optical) 30%, and IP platforms (IMS/VoLTE software) 19%. Access segment sales fell 7% to €1.78B (-20% exc. forex) - wireless access (mobile infrastructure) revenue fell 12%, and fixed access (broadband equipment) rose 5%.
- If not for a weak euro, Nokia and Alcatel's sales would've respectively fallen 1% and 9% Y/Y. Nokia ended Q2 with €3.83B in net cash and other liquid assets; Alcatel ended Q2 with €151M in net cash/investments.
- Bernstein's Pierre Ferragu, reacting to Nokia's numbers: "“Nokia continues to demonstrate excellent management execution (with Nokia Networks returning to 11.5% operating margin) and strong positioning in Wireless. This can only bode well for the upcoming integration of Alcatel-Lucent.”
- Nokia: Q2 results, PR (.pdf). Alcatel-Lucent: Q2 results, PR (.pdf)
Jul. 30, 2015, 5:31 AM
- Alcatel-Lucent (NYSE:ALU): Q2 EPS of -€0.02 misses by €0.02.
- Revenue of €3.45B (+5.2% Y/Y) misses by €80M.
Jul. 30, 2015, 4:04 AM
- Nokia (NYSE:NOK): Q2 EPS of €0.09
- Total revenue at €3.21B up 9.2% led by higher sales in Nokia networks and HERE.
- FY15 guidance: Nokia network 8%-11%, HERE 9%-12%.Capex 250M,
Jul. 29, 2015, 5:30 PM
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Jul. 29, 2015, 2:05 AM
- Nokia (NYSE:NOK) is plotting a return to the consumer market with an unexpected shift into virtual reality.
- The Finnish technology group has just revealed a spherical ball-like camera called OZO that can capture 360-degree videos through eight optical image sensors.
- Advantages of the new camera: Live monitoring - footage can be seen as it's being shot. Rapid playback - recordings don't need to be digitally stitched together before their viewed.
- Previously: Report: Nokia plans to unveil virtual reality hardware next week (Jul. 21 2015)
Jul. 24, 2015, 6:50 AM
- The European Commission has given the green light to Nokia's (NYSE:NOK) €15.6B acquisition of Alcatel-Lucent (NYSE:ALU), stating "the parties are not close competitors [and] a number of strong global competitors will remain active."
- The new deal marks Nokia's latest transition from a company with major interests in consumer markets to an operation focused primarily on business and industry clients.
- NOK +2.1%; ALU +3.1% premarket.
Jul. 21, 2015, 2:06 PM
- Re/code reports Nokia (NOK -0.7%) is "set to unveil its first major virtual reality project next week at a VIP event in Los Angeles." It adds the effort "represents the most significant consumer hardware launch from Nokia since it sold its mobile phone business to Microsoft in 2013."
- The site previously reported Nokia is working on VR projects, while providing few details. Facebook's Oculus VR unit (plans to launch its first commercial headset in Q1 2016) is widely seen as the early technology leader in the space. Sony and HTC are working on rival platforms.
- Nokia also plans to begin licensing phone designs to 3rd-party OEMs next year.
- Earlier: Nokia reportedly strikes deal to sell HERE for $2.7B
Jul. 21, 2015, 11:32 AM
- The WSJ and Germany's Manager Magazin report Nokia (NOK -0.7%) has reached a deal with a consortium featuring Daimler (OTCPK:DDAIY), BMW (OTCPK:BAMXY), and Audi (OTCPK:AUDVF) to sell its HERE mapping/navigation software unit for about €2.5B ($2.72B).
- The deal will reportedly be finalized by month's end, with the automakers subsequently running HERE, the top player in the automotive navigation software space, as an open platform. The reported sale price is less than the ~$4B Nokia was believed to be seeking.
- With HERE having 2014 revenue of €969M (+6% Y/Y), Nokia appears to be selling the unit for roughly 2.6x trailing sales. Bloomberg reported overnight Nokia and the automakers were close to a deal.
- Update: More details from the WSJ. Sources state the automakers "intend to purchase all of Nokia Here and then invite other global auto makers to take stakes in the company."
- Update 2: Reuters reports a deal worth between €2.5B-€3B is close, while adding the issue of patent ownership still needs to be worked out. The automakers want full ownership of Nokia's mapping patents; Nokia wants to keep control of some of the patents related to "how mobile devices connect to networks."
Jul. 21, 2015, 6:19 AM
- Nokia (NYSE:NOK) is nearing an agreement to sell its maps business HERE to a group of German luxury-car makers, including BMW (OTCPK:BAMXY), Daimler (OTCPK:DDAIY) and Audi (OTCPK:AUDVF).
- An agreement could be reached as early as next week, with an announcement targeted for around July 31, Bloomberg reports.
- Sources say Nokia has sought as much as $4B for the unit.
- NOK +1.3% premarket
- Previously: The latest on the Nokia HERE unit sale (Jul. 09 2015)
Jul. 14, 2015, 3:34 AM
- Nokia (NYSE:NOK) may re-enter the mobile phone market through licensing handsets under its brand name in late 2016, when the restrictions in place from its Microsoft sale come to an end.
- The company clarified that the partner they are looking for should be able to do all the "heavy lifting" and would work closely with Nokia to deliver a product.
Nokia Oyj provides network infrastructure, technology and software services. It operates through four segments: Mobile Broadband, Global Services, HERE, and Nokia Technologies. The Mobile Broadband offers network solutions for mobile voice and data services through its Radio and Core clusters... More
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