Free of devices, new Nokia's hand looks better than Microsoft's

Summary:Would you rather be Nokia going forward or Microsoft, which now has to fix a mobile device unit that saw sales plummet in the first quarter? Advantage Nokia.

The more time passes, the better Nokia's sale of the handset business to Microsoft looks. Just imagine how Nokia's sale is going to look a few years from now.

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Microsoft's new Nokia mobile unit made a €326m loss last quarter

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Microsoft touts buying Nokia's handset business — now run by Stephen Elop inside the software giant (again) — as a transformative deal. The transformation rests with the old Nokia, now a networks, patent-licensing, and navigation company.

Last week, Microsoft welcomed Nokia's handset business into the fold, talked about the future and had an optimistic view of the mobility landscape. Nokia's earnings results, the last with the device business, tell a different tale.

The device business — Lumia and other mobile phones — are represented by discontinued operations for the most part. Simply put, the mobile phone business is in freefall compared to a year ago.

The loss for the quarter was €326 million.

Keep in mind that the year ago was no picnic either. Here's a look:

 

nokia discontinued

Microsoft's job now is to stop the bleeding, harness Nokia's hardware knowhow, and get its act together for what will be a critical fourth calendar quarter and holiday season.

Nokia's job is to spend Microsoft's money and retool. To wit:

  • The company will reinstate a dividend since the bleeding device business is gone.
  • Buy back shares.
  • Cut debt.
  • Throw shareholders a special dividend.

Meanwhile, new Nokia CEO Rajeev Suri will build the company's networks business, invest and monetize its HERE business or "location cloud," license its patents, and develop new products. Nokia's tech unit sees areas such as "low-power connected smart multi-sensor systems, distributed sensing, and intelligent interplay between various types of radio technologies" as fertile ground.

Down the road, perhaps the device swap with Nokia and Microsoft will be a win-win. Microsoft's purchase of Nokia wasn't terribly expensive and if the software giant cures its Apple envy maybe the deal is a steal.

But in the short term, Nokia has a better hand to build on. Advantage: New Nokia.

Read more on Nokia

Topics: Mobility, Microsoft, Networking, Nokia

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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