New-look Nokia claims profits, but Elop payoff raises eyebrows

New-look Nokia claims profits, but Elop payoff raises eyebrows

20 SEP 2013

Nokia published figures intended to show how its results would have improved in the first half of 2013 when adjusted to take into account its acquisition of Siemens’ stake in NSN and the sale of its loss-making handset business to Microsoft.

But drawing most attention was the fact that Stephen Elop, former president and CEO of the company, is in line for an almost €19 million payout when he moves to Microsoft, after just three years at the helm at Nokia.

The company released its numbers as it called an extraordinary general meeting for 19 November, at which shareholders can vote on the Microsoft deal. Risto Siilasmaa, chairman and interim CEO, said that the board “recommends that Nokia shareholders vote to confirm and approve the Sale of the D&S [Devices & Services] Business at the Extraordinary General Meeting”.

Nokia said the disposal and the resulting technology licensing agreements “significantly strengthen Nokia’s financial position and provide a solid basis for future investment in the continuing business.”

According to the figures, for the first six months of 2013, the new-look Nokia would have reported an operating profit of €19 million on sales of €6.3 billion, compared with its actual operating loss of €265 million on sales of €11.55 billion.

As of 30 June 2013, Nokia’s total cash and other liquid assets was €9.45 billion, with net cash and other liquid assets of €4.07 billion. Taking into account the hypothetical impact of the deals, total cash would have been €12.85 billion, with net cash at €7.47 billion.

Elop is to receive €18.8 million in salary and bonus in line with the move to Microsoft, just three years after he received more than €4 million to move in the other direction. The lion’s share – 70 per cent – will be borne by Microsoft.

As previously reported, Nokia said that after a “strategic planning process” it initiated in June 2012, talks with Microsoft became “more concrete” in February 2013, with a call from Steve Ballmer, Microsoft’s CEO, to Risto Siilasmaa, chairman of the Nokia board, which suggested a meeting to “discuss the possibility of deepening Nokia and Microsoft’s existing partnership”.

Nokia then conducted a review, alongside financial advisor JP Morgan, which led to the deal as announced.

Nokia has also delayed publication of its Q3 results to 29 October 2013 as a result of the transformative transactions.

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Steve Costello

Steve works across all of Mobile World Live’s channels and played a lead role in the launch and ongoing success of our apps and devices services. He has been a journalist...More

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