By Sven Grundberg
STOCKHOLM-- Nokia Corp. has named mobile-network veteran Rajeev
Suri chief executive and said it will use a significant amount of
the cash from the recent sale of its handset business to distribute
more than EUR3 billion ($4.15 billion) to investors.
The moves, announced early Tuesday, follow Friday's closing of
the EUR5.4 billion sale of Nokia's once-dominant mobile-device unit
to Microsoft Corp. First announced in September, the deal is
designed to focus Finland-based Nokia's business on wireless
networks and intellectual property and make the U.S. hardware giant
more competitive in the mobile industry.
The sale has been widely applauded by Nokia investors, many of
whom assigned little or even negative value to the phone business
after it lost considerable ground to the likes of Apple Inc.,
Google Inc. and Samsung Electronics Co. Since the deal was
announced last September, Nokia's stock has almost doubled.
The company said it will now pay at least EUR800 million in
ordinary dividends for 2013 and 2014, and a special dividend of 26
euro cents a share, or about EUR1 billion in all. In addition,
Nokia will initiate a EUR1.25 billion share-repurchase program and
reduce interest-bearing debt by EUR2 billion by 2016, as it seeks
to restore its investment-grade credit rating.
Mr. Suri, a 46-year old electronics and telecom engineer, has
headed Nokia's mobile network unit since 2009 and was widely
expected to be named chief executive.
The Indian-born executive succeeds Risto Siilasmaa, Nokia's
chairman, who served as interim CEO of the since last September,
when Microsoft Corp. announced its intention to buy Nokia's handset
business. Stephen Elop had been running Nokia when the handset
business was sold, but stepped down to take a senior job with
Microsoft.
Mr. Suri is often credited with the successful turnaround of
Nokia's mobile-network arm, Nokia Solutions and Networks, a
business that had been plagued by losses and overcapacity after its
complicated merger with Siemens's network unit in 2006. With
Nokia's sale of its phone business, that unit will account for the
lion's share of the company's revenue.
In 2011 Mr. Suri embarked on a plan to significantly trim the
network business, cutting a quarter of its total staff and exiting
several business areas. That returned the operation to
profitability, but Mr. Suri must now oversee its return to growth.
Fourth-quarter for the network business was down 22% from a year
earlier, and is expected to decline further in the first quarter.
Nokia said it had appointed Samih Elhage, the former chief
financial officer of its mobile-network unit, as its new chief
operating officer.
Relieved of its money-losing phone operation, Nokia said its
"financial position and earnings profile have both improved
significantly" and that it therefore would distribute extra cash to
shareholders and buy back shares as part of a "capital structure
optimization program."
In a statement, Nokia finance chief Timo Ihamuotila said the
initiatives are part of Nokia's longer-term ambition to "return to
an investment grade credit rating." Nokia ended the first quarter
with EUR2.1 billion in net cash, before the sale of its handset
unit to Microsoft was completed. Had the transfer been completed
during the quarter, Nokia said its net cash holdings would have
been EUR7.1 billion.
Nokia will releasing its first-quarter earnings report later
Tuesday.
Write to Sven Grundberg at sven.grundberg@wsj.com
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