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Nokia Corporation (NOK)

  • Yesterday, 1:42 AM
    • Nokia (NYSE:NOK) on Sunday squashed rumors that it was planning a return to mobile-device manufacturing, which it exited last year by selling its once-dominant handset business to Microsoft.
    • "These reports are false," Nokia declared, adding that the company "currently has no plans to manufacture or sell consumer handsets."
    • Earlier this month, Nokia launched a $16.6B bid to acquire French rival Alcatel-Lucent, looking to solidify its position in the wireless infrastructure industry.
    • Update: While Nokia has denied planning a return to phone manufacturing, Re/code reported last week the company might license its phone designs to third parties who would handle manufacturing and sales/distribution, much as it has licensed its N1 Android tablet design to Foxconn.
  • Wed, Apr. 22, 2:50 PM
    • Ahead of Facebook's (FB +1.1%) afternoon Q1 report, Germany's Manager Magazin reports the social networking giant has expressed interest in Nokia's (NOK +1.7%) HERE mapping/navigation services unit. Uber, a consortium of German automakers, and a P-E firm have also reportedly shown interest.
    • The report comes after Nokia stated it's exploring options for HERE ahead of a planned merger with Alcatel-Lucent. The unit, which has had a tough time competing against Google Maps in Web/mobile mapping but has fared better in the automotive market, has been assigned a book value of €2B ($2.14B) by Nokia; many think it can fetch a higher price.
    • Facebook's PC site currently relies on Bing Maps, and its mobile apps on Google Maps. Owning a mapping platform could help Facebook deliver a better experience when integrating user/business data and local services with maps.
    • Separately, Facebook has launched Hello, an Android phone dialer app that relies on publicly-shared Facebook profile info to provide caller ID data and photos. No iOS version will launch due to Apple's app restrictions.
    • Hello (currently available in the U.S., Brazil, and Nigeria) also adds Facebook profile pictures and info to a user's contact book, integrates with Messenger to support free VoIP calls, and features a search bar that can be used to search for contacts/businesses. Much like the Home Android UI (hasn't lived up to expectations), it aims to strengthen Facebook's mindshare and engagement with Android users.
    • Shares are higher ahead of earnings. Though generally expecting strong numbers, several analysts have been slightly cautious due to forex concerns and high expectations; ad partner Nanigans recently reported solid Q1 figures.
    • Update (6:40PM ET): Bloomberg also reports Nokia, German automakers, and P-E firms are looking at HERE. It adds Nokia has reached out to Apple, Alibaba, Baidu, Amazon, Sirius, and Harman. First-round bids are reportedly due at the end of next week.
  • Wed, Apr. 22, 11:23 AM
    • After downgrading Alcatel-Lucent (ALU +2.5%) to Market Perform last week in the wake of the Nokia (NOK +2.1%) merger announcement (many other firms downgraded soon afterwards), Bernstein has upgraded shares back to Outperform. Meanwhile, Barclays has upgraded Nokia (has seen a mixture of upgrades and downgrades over the last week) to Overweight.
    • Bernstein: "We split our time modelling carefully how the new company could evolve in the next 3 years, reviewing potential risks associated with the merger and the integration, and testing sentiment and expectations in the industry ... We conclude with an optimistic perspective."
    • The firm thinks the post-merger company can deliver 4%-5% revenue growth while expanding margins, and sees IP licensing potentially driving upside. "We see no reason for the deal not to go through despite some shareholder grumbling at Alcatel-Lucent, and see, against conventional wisdom, no material execution risk in the integration, given the track record of those on the helm, the right governance starting point and the very clement industry context."
    • For his part, Nokia CEO Rajeev Suri has argued tech advances, such as open hardware interfaces, IP-based 4G infrastructures, and cloud services, will "allow more rapid and efficient integration" than seen for past deals. "While some of our past integration experiences have been painful at times, you should not be thinking about swap-out costs in the same way as in the past."
    • Nokia is up 5% over the last two days. Alcatel-Lucent is up 7%. Nokia's Q1 report arrives on April 30, and Alcatel-Lucent's on May 7.
  • Mon, Apr. 20, 12:05 PM
    • Nokia (NOK -0.4%) "aims to rejoin the phone market" as early as 2016, two sources tell Re/code. The company has already launched a $249 Android tablet (the N1) with the help of contract manufacturer Foxconn, as well as an Android launcher app. Per the terms of the Microsoft deal, Nokia is free to begin selling phones under its own brand again next year.
    • Nokia is also said to be working on "a number of other ambitious technology projects, including some in the virtual reality arena." The efforts are being undertaken by the Nokia Technologies R&D/IP licensing unit. "They have a lot of great stuff in development," says former Nokia exec Richard Kerris.
    • Re/code adds Nokia will likely rely heavily on third parties to bring new products to market. "[T]he N1 serves as a model of what the company hopes to do: Design cool products and then license the designs and Nokia brand to a company that will not only do the manufacturing, but also be responsible for sales and distribution."
    • Separately, Jefferies has downgraded Nokia to Hold today. The company received a mixture of upgrades and downgrades last week following the Alcatel-Lucent deal. Shares are off slightly on an up day for equities.
  • Sat, Apr. 18, 8:04 PM
    • Nokia (NYSE:NOK) and Alcatel-Lucent's (NYSE:ALU) planned merger could unravel Nokia's R&D partnership/reseller deal with Juniper (NYSE:JNPR). Juniper, which has partnered with Nokia on solutions that pair the former's routers with the latter's base stations and mobile core network gear, counts Alcatel as its second-biggest rival (after Cisco) in the carrier router market, and also squares off against the company in other markets such as carrier SDN software.
    • Ruckus (NYSE:RKUS) is another Nokia partner that could be in the crosshairs: The company competes against Alcatel in carrier Wi-Fi hardware, and has a reseller deal with Nokia that goes back to 2012. The deal was recently expanded to cover Wi-Fi/4G small cell systems.
    • At the same time, the merger has fueled speculation one or more rivals could respond with acquisitions of their own. A potential acquisition of Juniper by mobile infrastructure giant Ericsson (NASDAQ:ERIC) has especially been the subject of much talk.
    • Ericsson is also viewed as a potential suitor for optical networking hardware vendors/fellow Alcatel rivals Ciena and Infinera. Ruckus has been seen as a potential M&A target for a long time. However, it currently competes against Ericsson, which bought Wi-Fi hardware vendor BelAir Networks in 2012.
    • RF backhaul hardware maker DragonWave (NASDAQ:DRWI) could also lose business thanks to the merger; it bought Nokia's RF backhaul business in 2012. and maintains a reseller deal. However, H.C. Wainwright recently downplayed those concerns, arguing Alcatel's RF backhaul systems are expensive and clunky.
    • Juniper and Ericsson report earnings on April 23, and Ruckus on April 30.
  • Thu, Apr. 16, 7:19 PM
    • BMO, Citi, Crag-Hallum, Bernstein, Goldman, Credit Suisse, and Natixis have downgraded Alcatel-Lucent (NYSE:ALU) following news of its all-stock merger with Nokia (NYSE:NOK). Nokia has been upgraded by Bernstein, Natixis, and Morgan Stanley, and downgraded by Citi. RBC, and Finland's Pohjola Bank.
    • Citi: "We continue to believe Nokia would have been better off acquiring just the Wireless assets but were forced to acquire the entire company possibly leading to what we believe was a low purchase price...We believe the all stock structure (and no collar) creates new risk for Alcatel holders..."
    • The firm thinks a part-cash deal would've been better, given low interest rates. It also argues a target of €900M/year in cost savings by 2019 could be tough to hit, given limited R&D overlap.
    • RBC: "We're strong proponents of industry consolidation in markets with high R&D investments and intense price competition" But like Citi, the firm thinks Nokia should've only bought Alcatel's wireless assets. It also believes "product portfolio rationalization may take 3-5 years," and that R&D commitments to carriers could affect near-term cost savings.
    • Deutsche, in a note just before the announcement: "We believe a Nokia/ALU deal would create share gain potential for Ericsson (NASDAQ:ERIC), firstly in China, where telcos would likely want to restore share balance between overseas vendors, and in North America at Sprint, where Ericsson would likely be able to re-enter ... In addition, we note that ALU’s overlay technology is not compatible with Nokia’s single RAN which in our view will make it time consuming to combine R&D roadmaps and extract financial synergies."
    • Morgan Stanley is more optimistic: "With Alcatel, Nokia now has exposure to the #2 edge routing player, taking share in both edge and core, a strong footing in the consolidating optical market, and a duopoly position in the growing wireline access market ... In the US, Nokia will now supply to all big four wireless operators and now has enough scale to compete with Ericsson and Huawei on 5G. The larger Nokia will have doubled its patent portfolio too – which makes the patent story more credible."
    • Both companies fell slightly today. Nokia is nearly flat since a Friday report about a potential HERE unit sale (later confirmed) sparked M&A speculation. Alcatel, which has been on a roller-coaster ride, is up 2% since the report.
    • Previously: The merger announcement, details/asset sale plans
  • Wed, Apr. 15, 10:29 AM
    • Alcatel-Lucent (ALU -16.8%) has nosedived following news of its $16.6B deal to merge with Nokia (NOK -1.6%). Based on Nokia's Tuesday close of $7.96, the all-stock deal values Alcatel at €4.09/share ($4.35/share) to shareholders - well below yesterday's close of $4.93, though up from where shares traded ($4.07) before the first report of deal talks emerged.
    • Along with the deal, Nokia has confirmed it's exploring options for its HERE mapping/navigation unit, including a possible sale; analysts have argued HERE could fetch more than the €2B Nokia officially values the business at.
    • Meanwhile, Reuters reports contract manufacturer Flextronics (FLEX +1.1%) is in advanced talks to buy the manufacturing arm of Alcatel's Shanghai Bell Chinese telecom equipment JV. The JV had 2014 revenue of €3.1B ($3.28B).
    • Nokia will own 66.5% of the post-merger company, and Alcatel 33.5%. The company will operate under the Nokia brand and be headquartered in Finland. Nokia chairman Risto Siilasmaa will be its chairman, and Nokia CEO Rajeev Suri its CEO. The board is expected to have 9 or 10 members, with 3 from Alcatel-Lucent (one of whom will be vice chairman).
    • The companies are aiming for €900M/year in cost synergies by 2019, and €200M/year in interest savings by 2017. Nokia is maintaining its dividend, but is suspending buybacks until the deal closes. As of the end of 2014, NOK/ALU had €7.4B in net cash between them.
    • In a presentation (.pdf), NOK/ALU assert they'll offer carriers an end-to-end mobile/wireline portfolio covering mobile radio and core networks, IP routing, optical networking, cloud/SDN software, and various related services. Combined R&D spend of €4.7B/year is on par with Cisco's.
    • Bernstein has upgraded Nokia to Market Perform, and downgraded Alcatel to the same rating. Regulators are expected to take a close look at the deal's impact on the mobile infrastructure market - especially in the U.S., where Chinese firms are effectively locked out.
  • Wed, Apr. 15, 1:44 AM
    • Nokia (NYSE:NOK) has agreed to acquire telecoms equipment company Alcatel-Lucent (NYSE:ALU) for €15.6B ($16.6B), in a deal that would solidify its ambitions to become a major provider of networking equipment.
    • The merger will take the form of a public exchange offer in France and the U.S., under which Nokia will give Alcatel-Lucent shareholders 0.55 shares in the combined company for each of their old shares.
    • The deal is expected to close in the first half of 2016.
    • Previously: Nokia confirms 'advanced' merger discussions with Alcatel-Lucent (Apr. 14 2015)
    • ALU +1% AH
  • Tue, Apr. 14, 4:22 AM
  • Mon, Apr. 13, 5:39 PM
    • Top gainers, as of 5:15 p.m.: GSAT +4.5%. AMCN +3.4%. GWPH +2.4%. IAG +2.3%. Z +2.2%.
    • Top losers, as of 5:15 p.m.: GLUU -9.1%. NSC -3.8%. NOK -2.5%. CSX -2.1%. REED -2.0%.
  • Mon, Apr. 13, 4:10 PM
    • Sources tell Bloomberg Nokia (NYSE:NOK) might announce a deal to buy Alcatel-Lucent's (NYSE:ALU) wireless infrastructure hardware assets "as early as this week." Though a full-blown buyout of Alcatel has also reportedly been examined, a wireless deal "remains the most likely scenario."
    • Nokia execs are reportedly working to win the French government's support. French government reps are said to be working on a compromise that would protect some domestic R&D jobs.
    • Acquiring Alcatel's wireless unit (2014 sales of $5B) would yield cost synergies and increase Nokia's mobile infrastructure scale as it battles against market leader Ericsson (ERIC) and China's Huawei and ZTE. It would particularly strengthen Nokia's position in North America (Lucent's stronghold prior to the merger) and China. At the same time, the post-merger entity could lose share with carriers already relying on both Alcatel and Nokia, and wanting to maintain their current level of supplier diversity.
    • For Alcatel, a sale would further lower the company's net debt load (a recent priority) and shed a business that has underperformed relative to Alcatel's IP routing unit.
    • Alcatel closed up 7.9%. Nokia closed up 3%.
    • Earlier: Nokia reportedly in talks to buy Alcatel-Lucent assets
  • Mon, Apr. 13, 2:52 PM
    • Bloomberg reports Nokia (NOK +2.9%) is in advanced talks to buy certain assets from Alcatel-Lucent (NYSE:ALU). Alcatel has soared in response; Nokia has also moved higher.
    • Alcatel rallied on Friday after a Bloomberg report stating Nokia is exploring a sale of its HERE mapping unit fueled speculation the company would bid for all or part of Alcatel (as has been rumored before).
  • Fri, Apr. 10, 12:21 PM
    • Alcatel-Lucent (NYSE:ALU) has jumped following a Bloomberg report stating Nokia (NYSE:NOK) is exploring a sale of its HERE mapping/navigation software unit - a move that would both leave Nokia solely focused on telecom equipment and IP licensing, and provide it with more funds for M&A.
    • A German magazine reported last December ALU and Nokia had revived M&A talks in the fall, and Reuters reported in 2013 Nokia was "discussing internally" whether it should bid pursue a deal with ALU.
    • Deal proponents have argued a Nokia/Alcatel-Lucent merger would both yield major cost synergies and significantly expand Nokia's wireline equipment lineup, thus leaving it better-positioned to compete for major deals against the likes of Ericsson, Huawei, and Cisco.
  • Fri, Apr. 10, 10:53 AM
    • Less than two years after striking a deal to sell its phone unit to Microsoft, Nokia (NOK) is exploring the sale of its HERE mapping/navigation unit, Bloomberg reports.
    • HERE, previously valued by Nokia at €2B ($2.12B), is reportedly "attracting interest from companies and private-equity firms," as CEO Rajeev Suri tries to slash Nokia's debt load. Bloomberg cautions Nokia might opt against a sale if it can't get a sufficient bid; bids are expected soon.
    • HERE had 2014 revenue of €969M ($1.03B, +6% Y/Y), and an op. profit of €31M ($33M, -35% Y/Y); top-line growth is expected in 2015. The business has had a tough time competing against Google in the online/mobile mapping space, but has fared better in the automotive market. Google's Android Auto and Apple's CarPlay platforms have begun providing fresh auto market competition.
    • The unit saw a leadership change last year that reportedly stemmed from a disagreement with Suri over whether HERE should continue going after consumers or focus on auto/enterprise opportunities.
    • Nokia has spiked higher following Bloomberg's report.
    • Update (12:42PM): Bloomberg now adds Nokia has reached out to ride-sharing giant Uber, and that "a group of German carmakers has also shown interest."
  • Fri, Mar. 27, 12:44 PM
    • Nokia (NOK +0.8%) will manage Vodafone's Vodafone Hutchison Australia's 2G,3G, and 4G network operations for another 4 years. The Sydney Morning Herald reports the deal is worth around $200M.
    • Notably, Nokia will handle the work from an Indian Global Delivery Center. The company's global services revenue totaled €1.58B (+3% Y/Y) in Q4, and €5.11B (-11% Y/Y) over the whole of 2014.
    • Separately, Nokia has its 2014 annual report (form 20-F). It can be downloaded on Nokia's site.
  • Tue, Mar. 10, 1:13 AM
    • Nokia's (NYSE:NOK) current forecast for licensing revenue (exc. the outcome of a 2015 Samsung arbitration ruling) to simply grow from a €600M/year run rate "understates the long-term potential for this business unit now that Nokia no longer will cross license its own mobile device business," says Canaccord Mike Walkley, reiterating a Buy and $12 target.
    • Walkley, who met with Nokia Technologies (licensing division) chief Ramzi Haidamus at last week's Mobile World Congress, also argues Nokia's core Networks business is "well-positioned to maintain strong margins and drive solid cash flows," and that the Here mapping/navigation unit can (like licensing) also boost margins and top-line growth.
    • Nokia is coming off a Q4 in which Technologies revenue rose 23% Y/Y to €149M thanks to rising Microsoft royalties, and Here revenue rose 15% to €292M to automotive growth. North American demand drove an 8% increase in Networks revenue.
    • JPMorgan has also been upbeat about Nokia's licensing potential in the wake of the Microsoft deal.
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Company Description
Nokia Oyj is a mobile communications company. The Company has three business: Networks, HERE, and Technologies and four business segments: mobile Broadband and Global Services within Networks, HERE, and Technologies.
Sector: Technology
Country: Finland