updated 08:00 pm EDT, Sun June 26, 2011
Nokia Siemens being restructured after failed sale
Nokia's troubles worsened on Sunday after a new leak uncovered problems at its cellular equipment venture Nokia Siemens Networks. It has reportedly failed to sell a controlling stake in the company and is instead turning to reorganization to stop its bleeding cashflow. Under the plans divulged to the WSJ, both Nokia and Siemens would put money into NSN or else let the less unstable Siemens get control.
A buyout deal was still an option, but discussions with equity firms Gores Group LLC and Platinum Equity LLC were stalled where equal talks with a coalition group involving Kohlberg Kravis Roberts & Co. and TPG Capital had already died off. The alliance could buy a $3 billion footprint in NSN and help stem losses in the short term.
The problems with NSN have left Nokia with few options other than to refocus its already ailing phone business, whose smartphone business has collapsed in the four years since the iPhone and later Android arrived on the market. With losses of roughly $1 billion in the past year, NSN has been a drag on Nokia and doesn't necessarily have a ready fix. Rivals like Ericsson have been faring better, in part owing to their longer presences in the field.
Rumors have persisted that Nokia might sell off its core phone business but have mostly been dismissed when considering NSN's smaller size along with its losses.