NEW YORK ( The Deal) -- Stumbling Finnish cellular network equipment company Nokia Siemens Networks Oyj said Tuesday, Sept. 11, it was in talks to sell its business support systems unit as it continues to sell off peripheral units in a bid to get back on track.
Nokia Siemens CEO Rajeev Suri didn't reveal who the company was talking to or how much he wanted for the division, which is estimated to be worth ¿300 million ($385.9 million).
"I would say overall we have about six divestments that already took place. They're either not core to our mobile broadband or we see that the profitability is not where we want it to be," Suri told reporters.
Investors welcomed the news. Nokia shares Tuesday closed up 3.9%, or ¿0.082, at ¿2.172.Nokia Siemens is restructuring in the face of ever-growing pressure from rivals including Sweden's Ericsson AB and China's Huawei Technologies Co. and ZTE Corp. Nokia Siemens is laying off 17,000 employees, or a quarter of its workforce, and has sold its WiMax next-generation technology to a portfolio company of private equity shop Skyview Capital LLC. Ericsson is reportedly leading the auction for the business support division, which makes equipment for cellphone companies to handle billing on their networks. Based in Espoo, Finland, Nokia Siemens was formed from the network equipment divisions of troubled Finnish cellphone maker Nokia Oyj and German conglomerate Siemens AG as the network equipment units struggled separately. The parent companies last year tapped Bank of America Merrill Lynch and Morgan Stanley, respectively, to sell the venture but failed despite talks with Blackstone Group LP, TPG Capital and Bain Capital LLC, among other possible suitors. As part of its exit from the phone business, Siemens unloaded both its fixed-line and cellular phone divisions. But Nokia, which once ranked as the world's biggest cellphone maker, is now besieged as consumers snap up smartphones from Apple Inc. and South Korea's Samsung Corp. In the second quarter, Nokia saw sales slip 19% to ¿7.5 billion, pushing it to an operating loss of ¿327 million from profit of ¿391 million in the same period a year earlier. The Finnish company has focused its hopes on its new Lumia phones, to be released later this year. But the phones already have a black eye after Internet sleuths determined Nokia had misrepresented the video stabilization, or "Pure View," capabilities of its Lumia 920 phone in a new ad. The television ad shows a young man and woman riding bicycles along a river. As he films her laughing, the ad illustrates both nonstabilized and stabilized video. In a post on its company blog, Nokia admitted, "This was not shot with a Lumia 920. At least, not yet. We apologize for the confusion we created." Even without the embarrassing concession, analysts predict that Nokia's new phones will have trouble competing against new models from Apple and Samsung. "If the Lumia phones are offered at the same pricing as phones from Samsung and Apple, they'll win very little market share since there's not much interest in phones with a Windows operating system," Deutsche Bank AG analyst Kai Korschelt wrote in a note Tuesday. He downgraded Nokia stock from hold to sell.