Nokia eager to shed luxury badge

Nokia's plans to shed its Vertu brand have reportedly come closer after a leak [free reg. required]. Uncredited tips to the FT had one of Nokia's Finnish neighbors, private equity firm Permira, reportedly in talks to buy the luxury phone badge for about €200 million ($264.9 million). A competing equity group, EQT, had discussed the idea at one point but would have stalled.

The deal would be to bolster Permira's stake in upscale brands. It already has stakes in Hugo Boss and Valentino, and would be buying the Vertu name more than the current technology. Existing Vertu phones are all based on Symbian, most often the basic feature phone-oriented S40. Newer phones have been adopting the smartphone-level S60, although it was only just last fall that Vertu adopted touchscreens with the Constellation.

None of the parties involved, including Nokia's financial advisor Goldman Sachs, were commenting on the prospective deal. Previously, however, CEO Stephen Elop had warned that the company might need to offload divisions or projects that are considered liabilities. Vertu does make money for Nokia, but at no more than €300 million ($397.3 million) in estimated revenue per year, it forms a small part of a larger business.

The Vertu brand has mostly been successful in areas like the Middle East, where the diamonds, platinum, and sapphire-coated glass appeal to segments of the population that want ostentatious displays of wealth. Pressure has mounted in the smartphone era, when many celebrities and executives are more likely to get an iPhone, Android phone, or BlackBerry than a device using the aging, and now outgoing, Symbian platform.

With Nokia facing a steep loss and now seeing its cash position as vulnerable, the company may consider it more worthwhile to sell Vertu and buy time for the Windows Phone transition than to try and adapt its Windows Phone technology to a brand that normally sees a low volume of sales to start.

By Electronista Staff

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iPhone, industry, Google, Nokia, Android, BlackBerry, RIM, mobile phones, Apple, Goldman Sachs, Vertu, Permira, EQT