Friday, September 12, 2014

After the Bloodbath – What Remains of Nokia


Nokia, as a company continues to operate after Microsoft took over it’s most quintessential division – the “Devices & Services” which made smartphones and feature phones. What remains now, are three divisions


  • Nokia Networks – The erstwhile Nokia-Siemens Network (NSN) division, where Siemens’ stake was later bought over by Nokia. This division is the largest, and now the “bread earner” for the Nokia family, so as to say.


  • Here – The mapping & navigation division, which was initially called “Ovi Maps”, then “Nokia Maps”, and finally “Here Maps”. It is the most frequently re-branded product/service to come out of Nokia, for sure.


  • Nokia Technology – I think better name for this division would have been Nokia IPR. This division is primarily involved in licensing the excellent portfolio of patents that Nokia owns, as well as developing new IPR.


In Q2 2014, Nokia reported revenues of 2.94 Billion EUR, which is a lot less than when the Devices & Services division was there (as expected) and a lot more less than the pre-Elop era, where Q2 revenues were around 9 ~ 10 Billion EUR (see previous posts to compare). Nokia is still loss making (considering the continuing operations), but by very thin margins – 28 million EUR. The chart below shows how each division is doing…...



As can be seen, Nokia Networks is by far the largest revenue earner, and is the main source of profits for the company. Here, has lower revenues, and sadly, hardly any profits (operating margin is 0%). I doubt that this would change over the quarters, as the mapping business is high-investment. Nokia Technology, on the other hand, holds a lot of promise for the company. While their revenues are even smaller than here (147 Million EUR), their operating margin is around 65%. This is expected, as what this division is doing is basically milking the cash cow of Nokia’s patent portfolio. It would be interesting to see the following few quarters, if Networks and Technology can help Nokia grow, and regain it’s lost glory. Meanwhile, it would also be interesting to see how Nokia’s ex Devices & Services is doing in Microsoft, but I assume that MS is not going to be as open with division-wise financial data, as Nokia is.

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