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Businesses Cellphones The Almighty Buck

Nokia Selling Its Headquarters To Raise Funds 186

Posted by Soulskill from the too-much-writing-on-its-walls dept.
PolygamousRanchKid writes with news the Nokia is looking to generate some cash by selling its headquarters and leasing it back from the new owner. The sale price for the 48,000 sq. meter building is €170 million. "The struggling mobile phone company has operated in the glass and steel building in Espoo near Helsinki, known as Nokia House, since 1997. The sale is another step towards reducing costs and concentrating on its core business. Nokia has spent almost a third of its cash reserves in 12 months, and in October had about €3.6bn left in the bank to turn itself into a smartphone manufacturer capable of competing with Apple and Samsung."
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Nokia Selling Its Headquarters To Raise Funds More

Nokia Selling Its Headquarters To Raise Funds

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  • Tax or Financial Engineering (Score:3)

    by alexander_686 ( 957440 ) on Tuesday December 04, 2012 @08:04PM (#42186485)

    I wonder if they are doing this for

    Tax Reasons: In the U.S. Real Estate Investment Trusts have favorable tax treatment – which is why the owner of the building and the occupier of the building is almost never the same, or for

    Financial Engineering reasons: a one time transaction to raise cash and is good window dressing for the financial statements. Better than taking out a mortgage, but it’s only a one time, stop gap measure.

    • Re:Tax or Financial Engineering (Score:5, Interesting)

      by roc97007 ( 608802 ) on Tuesday December 04, 2012 @08:34PM (#42186691) Journal

      3) Monetary reasons. They actually need the cash right now to stay in business. They're betting on a recovery and future sales covering the cost of money. (Speaking as having worked for a failing company that tried this. It probably helped them stay in business for a few more months.)

    • Re:Tax or Financial Engineering (Score:4, Interesting)

      by PolygamousRanchKid ( 1290638 ) on Wednesday December 05, 2012 @04:31AM (#42189431)

      4) Protection from a hostile takeover. The first thing that corporate raiders look at, is what assets a distressed company has. If the stock market value of a company is less than its physical or intellectual property assets, you can by it, sell the assets, close up shop, and make a tidy profit.

      Nokia has just made itself 170 million € less attractive to corporate raiders.

  • A really sad demise (Score:5, Interesting)

    by Bruce Perens ( 3872 ) <bruce@perens.com> on Tuesday December 04, 2012 @08:04PM (#42186487) Homepage Journal
    I have a Nokia n770 and n900, and they were capable systems. In some ways Android is only now reaching a similar capability. If Nokia could have been convinced to market them, Android might never have taken the market the way it did.

    I was one of a series of consultants they did not listen to with regard to Open Sourcing Symbian and what was, and was not, still of value in Symbian at that late date. Much of what they really valued - like the Symbian kernel - wasn't really business-differentiating in the eyes of the customer and nobody wanted it any longer, but yet they spent Billions on it.

    Their destiny is to become a patent troll or to have their assets bought by one. What a shame.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Maybe I'm not the average customer but the Symbian kernel is differentiating to me. Symbian phones are fast as hell and have battery life that Linux and BSD powered smartphones can only dream of.

    • So, they are in the sad company of their neighbors in Keilaniemi, like Kone and Fortum, who have also sold their headquarters to real estate conglomerates years ago and stayed on as tenants. Of those, only Neste Oil still owns their HQ.

      • Were they in a better position, they'd be able to sell stock to make money. But that will be more difficult now. Assets like real estate keep the value of the company from being entirely speculative. After this, expect them to sell some patents. And at the end of that, their value will be based entirely on whether people think the company can pull itself out of its current problems or not, they'll be a really poor rated stock, and they'll have no more sources of cash if they can't fix the company in the sho

        • Re: (Score:2)

          by 21mhz ( 443080 )

          And if they can't fix the company, holding onto that ownership title will help them how?

          It can be the case of somebody finally taking a hard look on things and saying: "WTF are we still doing this when we could get 170 million now and save on upkeep costs in the long run". Makes sense when a corporation optimizes its finances. It evidently made sense to Kone, who are not in any kind of trouble.

          • Re: (Score:2)

            by Bert64 ( 520050 )

            How exactly would they save on upkeep costs in the long run?
            Whoever they lease the building from is going to want the building properly maintained (especially considering nokia aren't likely to be around very long, so they will need to find replacement tenants soon), as well as making a profit from leasing it out,

          • Actually, Kone has had their ups and downs over the past decade. They suffered from a consolidation in the elevator market - their major business at the time - that pushed them out of the market to a great extent.
          • If they can't fix the company what they did with assets is moot. But disposition of assets reduces valuation over time despite any momentary uptick, so it can hinder fixing the company as well as help.

    • It was an anecdote for a while that their MeeGo / Harmattan based N9 was outselling their entire Lumia line combined, despite Nokia doing it's best to bury the thing, by not selling it in such core markets as the USA, the UK, Germany, France, Italy, Spain, etc ... this may have been true of Q4 2011, although Nokia have released no real numbers on the N9.

  • of course they are. (Score:4, Insightful)

    by lister king of smeg ( 2481612 ) on Tuesday December 04, 2012 @08:09PM (#42186511)

    Why of course they are selling the headquarters. Why would Microsoft need it when they already have a headquarters? All they just want the patents software(nokia maps) talent and factories. They already have all the bureaucracy and buildings they need.

    • Re:of course they are. (Score:5, Insightful)

      by roc97007 ( 608802 ) on Tuesday December 04, 2012 @08:40PM (#42186737) Journal

      Side note, does Microsoft actually need Nokia's factories or talent? Once Microsoft owns the IP, can't they simply close everything down and move the business to the US, and the manufacturing to China? If Microsoft is only concerned with (essentially) one product (the Windows 8 phone), why would they need Nokia's talent at all?

      Side side note, I wonder if this will have an appreciable effect on the economy of Finland? (Probably not, but I don't have the numbers in front of me.)

      • They probably don't "need it" but with the MS surface move Microsoft has made signals that they want a more apple like hardware operation, where they control hardware and software. Nokia has everything MS need aside for a phone and tablet show. Nokia had had dismal product lines recently but that because their CEO is trying to kill them so his former employer can buy up Nokia on the cheap. mind you much of thier products lines failing has been because they killed everything except windows phone but even the

      • Let me try to refine this question - Do you want to manufacture high quality phones or clone phones? I don’t know the answer.

        Nokia is known for 1. Engineers who make really good hardware and 2. High quality manufacturing in context of supplying different models in different markets (think different languages, networking standards, supply chains, etc.).

        Now, can Nokia charge a premium for it’s hardware over it’s rivals “beige box” android rivals? If the answer is yet then MSFT sh

        • > Let me try to refine this question - Do you want to manufacture high quality phones or clone phones? I don’t know the answer.

          In the context of this question, you want to manufacture Windows 8 phones, and *only* Windows 8 phones. Whether that falls into either above category is a matter of opinion.

          > Nokia is known for 1. Engineers who make really good hardware and 2. High quality manufacturing in context of supplying different models in different markets (think different languages, networking

      • Many Nokia factories are in other parts of Europe (or further) with cheaper labor rates. To be fair there was also some sense of being a larger EU/World player than just a Finnish brand. But some bad blood generated when they backed out of factory plans in Bochum Germany.

        The Nokia talent is good though, better than MS talent. If MS wants to make a good phone then there is no better place to look for talent; unless they merely want an inexpensive phone. However phones these days aren't really much in the

      • Re: (Score:3)

        by TheLink ( 130905 )
        You also have to ask how much of Nokia's talent is still working for Nokia.

  • Microsoft charged money for their software, and Nokia is history.

    • Seen how much money Microsoft is making out of Android?

      • Re:Google sells Android for less than free ... (Score:5, Insightful)

        by Flipao ( 903929 ) on Tuesday December 04, 2012 @08:37PM (#42186715)

        Seen how much money Microsoft is making out of Android?

        More than they make from Windows Phone.

      • Seen how much money Microsoft is making out of Android?

        What money!? There is loads of nominal amounts listed around the internet, Thinks hinted at of what has happened behind closed doors. We know a lot of deals have been struck we just can only speculate at what they are. The reality is I suspect very little actual money has changed hands.

  • There is still a big feature phone market out there. One option would be cutting back everything but feature phones and be profitable in that market. From what I remember Nokia made some rock solid feature phones.

    • Re: (Score:2)

      by s73v3r ( 963317 )

      I would highly doubt that market is anywhere near as profitable as the smartphone market was.

    • But it's going to be a diminishing market. The majority of phones seem to be offered on a plan basis in Western countries, so even phones which would be prohibitively expensive up front are available to people who would otherwise get feature phones.

      The only people I know with feature phones are people who explicitly do not want a smart phone (generally, but not always, the older generation). For most people, the cost difference between a plan with a feature phone, and a plan with a smart phone is marginal.

    • Feature phone market is down in the dirt. I can go to a shop and buy a feature phone for $29 with $20 credit on a prepay plan with no contract and the phone isn't even carrier locked. Android smartphones start at under $100. (all prices in NZD)

    • There is still a big feature phone market out there.

      Elop destroyed it by saying they were crap. In fact the OS set to replace symbian on these featurephones, the linux based "Meltemi" was cancelled make of that what you will. Samsung [featurephones]...and well "Value Android" are replacing these. I think you will be astonished at how powerful these value androids are...Check out the Huawei Ascend G330 look at the specs http://www.gsmarena.com/huawei_ascend_g330-4966.php [gsmarena.com].

      • Nokia is selling featurephones like hotcakes, they just don't run that ugly OS called Symbian. No Linux either, but who says that everything under the sun should run Linux?

        Just because you don't see these phones sold on the perennially screwed U.S. market does not give you an excuse to repeat misinformation.

  • Finland's GDP was US$189.4 billion in 2010 v's Apple's revenue of US$156.508 billion in 2012. Hard to compete when you rival's revenue exceeds your own countries' GPD.

    • Re:They need to sell Finland (Score:4, Interesting)

      by alexander_686 ( 957440 ) on Tuesday December 04, 2012 @08:35PM (#42186701)

      GDP is more akin to profit then to revenue. Apple's net profit was 47b in 2012, or about 1/4 of Finland. We should compare apples to Apple.

      • GDP is more akin to profit then to revenue. Apple's net profit was 47b in 2012, or about 1/4 of Finland. We should compare apples to Apple.

        False.

        Whichever method you use for calculating GDP, it is measuring economic activity -thus revenue, not profit.

        • Production method -market value of all final goods and services calculated during 1 year,
        • Income method -sum total of incomes of individuals living in a country during 1 year,
        • Expenditure method - all expenditure incurred by individuals during 1 year.

        Simply put: "[GDP] is akin to ignoring a company's balance sheet, and judging it solely on the basis of its income statement." http://en.wikipedia.or [wikipedia.org]

        • I am going to disagree with you.

          Pick apart the wiki article you posted and you will see things like:
          Production approach: Net Value Added = Gross Value of output – Value of Intermediate Consumption. (where Gross value of output is revenue) or
          Income approach: .Corporate profits
          Etc.

          Here is an example.

          In country Y
          Manufacture A has revenue of 45b and profits of 5b.
          Middle Man B distributes company’s A product. It has revues of 50b

    • Nokia's 2011 revenue was US$50b. Samsung Electronics was US$150b, which also includes all their TV's LCD panels, DRAM, Flash, Hard drives, Cameras, batteries and other appliances. They're beating Apple in the smartphone market.
  • Industry titan hits tough times and sells HQ. Apple is doing well now, but you have to wonder if we might see the new "mothership" on the block at some point.

    • Apple is doing well now

      Apple had had billions wiped off its value; Its market share is declining; The launch quarter figures for its most profitable product the iphone, and its new product the iPad is already being overtaken by Android...again. There last product launch the mini, was disappointing.

      ...but this is all off topic. Apple has different problems..and is a long way from being in any immediate trouble. Unlike Nokia which Microsoft have destroyed in months.

    • The thing is, Apple went through hard times and managed to turn things around. People were predicting they would go out of business for years, then came iTunes, OS X, the iPod, the iPhone, and the iPad, all of which have been resounding successes, propelling Apple to previously unthinkable heights.

      Nokia actually has a similar story. It's an old company, and they have been in many businesses that they have since abandoned for more profitable ones. The question is: Will they be able to do it again?

      As far as I

      • Part of the decline of Apple during the mid-80s was due to the incredibly inept management that Apple used after Jobs left, but Jobs wasn't exactly instilling the same values at Apple back then that he did in his second tenure.

        It was Apple's arrogance that caused the hardships of the 90s, and their recognition of that arrogance and the purging of all the busywork ridiculous money-bleeding projects, as well as a good amount of luck and a nice fat settlement of what could have been a billion dollar lawsuit ov

  • they put Navteq up for sale?

  • The Microsoft and the Nokia (Score:5, Interesting)

    by DrJimbo ( 594231 ) on Tuesday December 04, 2012 @08:38PM (#42186723)

    A Microsoft asked a Nokia to carry him across a river. The Nokia refused because it was afraid of getting stung by the Microsoft. But the clever Microsoft argued that if it stings the Nokia then they would both drown. So the Nokia agrees and carries the Microsoft into the river. Halfway across the Microsoft stings the Nokia dooming them both. In its dying breath the Nokia asks the Microsoft why it did such a thing. The Microsoft replies "it is my nature".

    • Re: (Score:3, Insightful)

      by Anonymous Coward

      A Microsoft asked a Nokia to carry him across a river. The Nokia
      refused because it was afraid of getting stung by the Microsoft.
      But the clever Microsoft argued that if it stings the Nokia then
      they would both drown. So the Nokia agrees and carries the
      Microsoft into the river. Halfway across the Microsoft stings
      the Nokia dooming them both. In its dying breath the Nokia asks
      the Microsoft why it did such a thing.

      The Microsoft looks to HTC and Samsung as the Nokia sank. Grinning, it reaches for Nokia's patents as it goes under, whispering, "You see, Nokia, I can swim."

  • Congress could sell the Capitol building to aid in reducing the deficit

  • Nokia Meets Monty Python's Meaning of Life (Score:3)

    by guttentag ( 313541 ) on Wednesday December 05, 2012 @12:55AM (#42188461) Journal
    In the "birth" chapter of Monty Python's Meaning of Life, a hospital administrator walks in on a woman giving birth and is excited to see that they are using the most expensive machine in the whole hospital: the useless "Machine That Goes Ping." He explains to the doctors, nurses and students, who have forgotten all about the woman in labor, the twisted accounting brilliance this machine represents:

    You see, we leased this back from the company we sold it to, and that way it comes under the monthly current budget and not the capital account.

    Everyone applauds.

  • This won't reduce costs, day to day costs will increase as they will now be leasing the building and the new owners will want to profit from doing so, it will just give them a temporary injection of cash.

  • There are only two phone companies: Samsung and Apple. All others will disappear soon.

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