Nokia's (NYSE:NOK) mapping division HERE recently partnered with Chinese Internet major Baidu (NASDAQ:BIDU) to provide map services outside China, which will be available for use to Chinese customers on their desktops as well as smartphones (Windows Phone OS, Android and iOS). Baidu becomes the first Chinese company to offer international location services to Chinese tourists traveling abroad, and its decision to partner with Nokia is as strategic as it is a validation of HERE's mapping expertise. Baidu could not have partnered with its competitor Google (NASDAQ:GOOG) (NASDAQ:GOOGL) for obvious reasons, and Apple's (NASDAQ:AAPL) service does not work on platforms other than iOS. Therefore, HERE is an apt choice for the Chinese company, with its maps in more than 200 countries and voice-navigation facility in 118 nations. HERE's expansive international presence is especially important considering that Baidu is targeting China's rapidly growing tourist outflow with this deal. The number of Chinese people traveling to foreign countries has topped 100 million so far in 2014, with travel destinations ranging from neighboring Hong Kong and Taiwan to North America, Europe and Africa. (Press Release, Here.com, Dec 12 2014)  
It has been a busy year for Nokia's HERE maps division. Other recent developments include the launch of HERE maps on the Android platform on Google Play and the announcement of its launch on the iOS platform in early 2015. Similar to its functionality on the Windows OS, the free-of-cost HERE maps application is now available offline on Android as well, downloadable on Google Maps. HERE maps also is available on Samsung's (OTC:SSNLF) Tizen-powered devices such as its new Gear S smartwatch. The recent licensing agreements are in line with Nokia's strategy of focusing on autos and smartphones to expand its HERE business, and we expect the cross-platform availability to help Nokia expand its share rapidly in the global smartphone maps market, currently dominated by Google Maps. 
Our $8 price estimate for Nokia is roughly in line with the current market price.
The HERE Business
HERE is Nokia's mapping and location intelligence business, which currently contributes less than 3% of the company's valuation, according to our estimates. The division's sales grew by 12% year-over-year to EUR 236 million ($299 million) in the third quarter this year, on the back of rising sales to automobile customers and higher revenue realization from services offered to Microsoft. Sales to automobile customers represent over 50% of total HERE sales, and the growth in the quarter was aided by higher auto sales as well as higher uptake of in-vehicle navigation systems by customers.
Nokia has built the business primarily through acquisitions, starting with its buyout of Berlin-based gate5 in 2006, followed by the acquisition of Chicago-based Navteq for $8.1 billion in 2008 and 3-D map technology expert Earthmine in 2012.   The company also made a few interesting acquisitions this year, including Desti and Medio Systems, to make its HERE unit more personalized and intuitive and boost the long-term potential of its mapping business. (Press Release- Desti Acquisition, Nokia, May 30 2014) (Press Release- Medio Acquisition, Nokia, June 12 2014)
Nokia provides its map data to 80% of all car-navigation systems in the world and several major enterprises including Amazon (NASDAQ:AMZN), Yahoo (YHOO) and Microsoft (NASDAQ:MSFT).  Microsoft is one of Nokia's biggest customers, with its four-year licensing deal to use HERE on its mobile devices. We expect the recent efforts to expand HERE on non-Windows platforms as well as recent acquisitions and investments to help the company lay a solid foundation for its long-term growth and attract customers going forward.
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