NEW YORK ( TheDeal) -- Nokia (NOK) jumped nearly 3% on Friday following reports that Uber Technologies could outbid automakers for its Here mapping service.
The Finnish mobile technology group's American depository receipts gained 19 cents to $6.91 in New York.
Here has been a source of growth for Nokia, but accounts for just 8% of total sales. The strategic review for Here is partly motivated by Nokia's pending €15.6 billion ($16.6 billion) purchase of Alcatel-Lucent (ALU).
The New York Times reported that Uber could buy the service for $3 billion. An acquisition would reflect the meteoric rise of the car-hailing application developer, which tops the list of ultra-capitalized startups with a $40 billion valuation.
Chinese internet search provider Baidu put money in Uber late last year, reportedly providing as much as $600 million. As Uber has expanded globally, the ride-booking company has dabbled in new services such as UberFRESH's food delivery, UberRUSH courier service, UberESSENTIALS drugstore deliver service and UberCARGO van service. A spokeswoman for the San Francisco company could not be immediately reached Friday.
Nokia CEO Rajeev Suri outlined two reasons to explore a sale of Here in a late-April investor call. "The first is that location services are becoming of even greater strategic importance to automotive companies and others," he said. "Second, it is clear that Nokia's portfolio will become increasingly networks-focused once the Alcatel-Lucent transaction closes."
Here generated €261 million in the first quarter, an increase of 25% from the prior year. The business has 7.3% operating margin, with research and development accounting for nearly half of quarterly sales. Jaguar Land Rover Automotive recently decided to include Here's application in its cars, and the company recently launched its app for Apple ( AAPL)'s iPhone.
Moody's Investor Service analyst Roberto Pozzi suggested in a report that a sale of Here could generate €2 billion to €4 billion in proceeds. Citigroup Inc. had suggested the unit could fetch €4.5 billion.
Since the €5.44 billion sale of its handset division to Microsoft ( MSFT) last year, Nokia has relied increasingly on its networks division, which provides mobile equipment and services to telecoms. Moody's analyst Pozzi wrote that the bid for Alcatel-Lucent is an effort to gain ground on leaders Ericsson and Huawei Technologies.
Nokia is not exactly squeezed for liquidity. Moody's estimates that the post-merger company would have EUR13.3 billion in cash.