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Nokia May Sell Vertu Unit To Permira

 April 30, 2012 01:17 PM
 


(By Mani) Finnish mobile firm Nokia Corp. (NYSE:NOK) is in advanced stage talks with private equity group Permira to sell its U.K-based luxury Vertu mobile unit, according to a report on Reuters.

The potential sale, which could fetch about $265 million, is part of Nokia's stated strategy to get rid of its noncore assets as it is transforming itself to the demands of the market.

Vertu creates limited edition luxurious mobile phones using the finest materials available, including gold and titanium. Vertu, whose phones cost at least $300,000, has more than 450 points of sale globally, including more than 25 Vertu boutiques, in close to 50 countries worldwide.

[Related -Microsoft Corporation (MSFT): Little Choice But To Buy Nokia Corporation's (NOK) Devices & Services]

Nokia has disposed certain noncore assets in the past. In 2010, Nokia sold its wireless modem business to Renesas Electronics Corp. as part of a strategic business alliance between the two companies to develop modem technologies for HSPA+/LTE (Evolved High-Speed Packet Access / Long-Term Evolution) and its evolution.

The Vertu sale rumors come at a time when all the three major rating agencies – S&P, Fitch and Moodys – have downgraded Nokia's debt ratings, with two of them being junk.

Nokia is also incurring significant market share losses in smartphones and feature phones. The company is finding it tough to cope with the likes of the iPhone and other Android-based smartphones both in U.S. and emerging markets.

[Related -Microsoft Corporation (MSFT): Did Microsoft Act Late Over Deal With Nokia Corporation (ADR)?]

Even the consumer dynamics in emerging markets, which used to be Nokia's forte, have shifted from feature phones to cheaper Android smartphones offered by Chinese vendors such as ZTE and Huawei. Those devices offer touch-screen, ability to multitask, and run apps at a cheaper rate compared to the normal feature phones from Nokia that run on the Series 40 or Symbian.

The significant momentum and market share gains of the global ecosystems around the Apple and Android platforms have increased the competitive barriers to additional entrants looking to build a competing global smartphone ecosystem, such as Nokia with the Windows Phone platform.

In the last year, shares of Nokia have fallen 60 percent, and 29 percent year-to-date while trading between $3.54 and $9.38.

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