Nokia’s ex-CEO Jorma Ollila admits problems have been brewing for 10 years, analysts suggest Microsoft may bail them out
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Nokia’s long-serving CEO, now retired, has admitted in an interview with the Finnish YLE radio station that Nokia’s problems had been brewing for a long time, but that the company had not been able to turn the boat around.
Nokia CEO Jorma Ollila served from 1992 to 2006, and notes that they saw the coming problem with Symbian a long time ago, but were not able to transition to a new viable mobile operating system.
“It was mainly started with the weak software platform and the fact that this was not a European strength. We had recognized for 10 years, in the late 90’s and early 2000 what Nokia’s strength should be, but we were not in a position to implement it,” said the former head of Nokia.
He went on to say the company should have had a wake-up call to rouse it from its former normal and safe modes of thinking 10 years ago, but even now he still believed Nokia could triumph, as the company was still blessed with talented people who was able to maintain its leadership position for 14 years.
“In any case, this will be a long process, almost a marathon,” said Ollila.
Given Nokia’s recent junk rating for its debt, the company may need some help making it to the finishing line. An analyst suggests Microsoft may need to lend the company a bigger helping hand.
Microsoft is already paying Nokia $1 billion a year to use its software on Lumia smartphones. And investment bankers familiar with the technology sector said the support could extend well beyond that amount, if Nokia’s problems intensify.
Microsoft has $60 billion of cash, and Nokia is worth around $9.3 billion at present.
“If Nokia ends up in financial difficulties I believe the helping hand would be there,” said Sami Sarkamies, an analyst at Nordea.
“I don’t see Microsoft owning Nokia, but it would definitely provide financing to the tune of a couple of billion dollars,” said one veteran technology banker.
Any Microsoft support for Nokia would be more likely to take the form of an inter-company loan, or an equity stake, rather than a full takeover, a second banker said.
With much of its future riding on being relevant in Mobile it is certainly true that Microsoft can not afford to let Nokia fail, a sentiment which oddly enough does not appear to feature significantly in the calculations of those buying and selling the shares of the company.
Source: Reuters.com
