Nokia (NOK) Shuns Posh for Profits in Upcoming Vertu Sale

June 13, 2012 8:12 AM EDT Send to a Friend
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Nokia (NYSE: NOK) has been looking to exit the luxury mobile phone business for a while now as it looks to shore-up its balance sheet and focus on more profitable markets. And the end might soon be near.

According to reports out late Tuesday, Nokia might strike a deal with Swedish private-equity firm EQT Partners to divest its Vertu phone unit. The deal may be valued as much as €200 million (about $250 million), according to Bloomberg.

The deal may be announced as soon as this week.

Nokia recently eschewed its Symbian mobile OS in favor of going with Microsoft's (Nasdaq: MSFT) Windows Phone offering, an effort that has seen little in the way of returns for Nokia. Competitors Google (Nasdaq: GOOG) and Apple (Nasdaq: AAPL), have dominated the global smartphone race with their Android and iOS operating systems, respectively. Though Android is open and used across a broad spectrum of smartphones, Apple's iPhone has been a hot seller over the past couple years, jettisoning the Cupertino, CA-based media and tech giant to boasting the largest market cap of any globally-traded public company.

To be sure, Nokia wants a piece of that action. It might get its chance later in 2012 and into 2013 following the launch of Microsoft's new Windows 8 platform, which is expected to be tailored more toward mobile devices like smartphones and tablets.

For now, Nokia's Vertu -- which sells precious metal-and-jewel-encrusted devices starting at €5,000 -- is a thorn in the side. Started in 2008, the division was the go-to luxury mobile device offering in Western Europe in 2010, garnering 60 percent of the market.

But, recent issues in Europe following the financial crisis have cause Nokia to re-evaluate its position in the very niche market. Though Vertu's sales weren't specifically disclosed, the unit said it saw "high double-digit sales growth" in 2010 and 2011, according to one rep. Demand increased in the two markets you'd expect: the Middle East and Asia.

Whether or not the luxury market will come back isn't really a question; it will. Worst case is that Nokia can simply segment a boatload of cash to regain a strong presence in the market sometime down the line when its books shape up and investors can breathe easy.

For now, if you want a luxury Nokia phone...you'd better buy a Bedazzler.

Shares of Nokia are indicated for a lower open Wednesday.


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