Analysts mull Nokia breakup amid debate over shareholder gain
June 3, 2011 — 11:53am ET By Paul Rasmussen
Nokia CEO Stepehen Elop has strongly rebuffed rumors that Microsoft plans to take over Nokia's key devices and services unit. But research conducted by Bloomberg suggests that, having destroyed shareholder value by such a significant amount, the breaking price could be more than 50 per cent of its current worth.
Once valued at $300 billion, Nokia has seen its market value plummet around 77 percent, valuing the company at around $25 billion. Separating Nokia‘s handset, infrastructure, mapping and patents businesses would make the company worth around $39 billion, based upon valuations of comparable companies, according to Bloomberg.
"It's a classic situation where the parts are worth more than the whole," Matt McCormick, a money manager at the US-based financial advisory firm Bahl & Gaynor, told Bloomberg. "The clock is ticking. Nokia is a good brand, but it's a tired brand and they need to come up with something. They are going to be a strong candidate for a takeover."
Other analysts were less positive, believing that Nokia remained unattractive because it lacks a clear path to competing better with Apple's iOS and Google's Android. Other industry watchers have claimed Nokia was unlikely to attract any bidders and that its share price was still spiralling downwards.
In an effort to calm the gossip, Timo Ritakallio, the deputy CEO of the Nordic insurance company Ilmarinen, and the largest Finnish owner of Nokia shares, told the newspaper Helsingin Sanomat, "As the company's situation is very unclear, speculators can make hay." Despite this, Nokia's share price has continued to slide and was down nearly 5 per cent on the Helsinki Stock Exchange as of midday on Friday.