Nokia shareholders backed the €5.4bn sale of the firm’s mobile phone business to Microsoft, deciding that the deal’s financial benefits outweighed any objections to the loss of a Finnish national asset.
Investors holding over 99% of Nokia voting rights supported the deal, a final tally at yesterday’s share-holders meeting in Helsinki showed. The sale is expected to close in the first quarter of next year after regulatory clearances.
Nokia had in September agreed to sell its devices and services business and licence its patents to Microsoft after failing to recover from a late start in smartphones.
The sale is set to boost Nokia’s net cash position to nearly €8bn from around €2bn in the third quarter — a windfall likely to help it regain investment-grade status from credit rating agencies and allow it to return cash to shareholders.
Nokia earlier this year suspended its annual dividend for the first time in its 148- year recorded history in an attempt to preserve cash.
Without the loss-making handset business, the firm will derive over 90% of its sales from telecom equipment unit Nokia Services and Networks.
It will also include a navigation software unit and a trove of patents. Since the deal was announced, Nokia shares doubled, closing at €5.82 yesterday.
While the shareholder vote showed most believed the Microsoft deal to be the best option, many of the 5,300 attendees at yesterday’s meeting vented frustration at Nokia’s management.
The sale of the mobile phones business, Finland’s biggest brand and at one point worth 4% of national GDP, came as a shock to many Finns.
“Nokia has been one of the cornerstones for Finnish society. We are losing part of that,” said Sirkka-Liisa Vikman, who said it was her first and likely last Nokia shareholders’ meeting.
Risto Siilasmaa, the Nokia board chairman who is acting as interim CEO, asked shareholders to look to the future. He said the deal marked a transition for Nokia which has reinvented itself numerous times, starting out as a paper mill and making everything from rubber boots to television sets over the years. “Nokia has faced major changes on several occasions in its nearly 150 years’ history and overcome them,” Siilasmaa said.
Nokia phones will become part of Microsoft’s efforts to expand in consumer devices, although some analysts say it will have a tough time catching leaders Apple and Samsung.
Many shareholders have also been critical of former CEO Stephen Elop’s strategy, particularly his 2011 decision to adopt Microsoft’s Windows Phone software over Nokia’s own Symbian or Google’s Android.
In deciding to drop Symbian, Elop had told employees in an email that Nokia needed to jump from a “burning platform”.
But some critics said Elop was reckless in betting on the untested Windows Phone system and should have opted for Android, or at least phased out Symbian more gradually.
As Symbian sales collapsed and Nokia faced competition from Asian rivals at the lower end of the market, the company’s share of the global handset market fell to around 14% in the third quarter from a peak of 40% in 2007.
Elop stood down when he announced the deal with Microsoft, his former employer.
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