Neil Hughes
Shares of Nokia fell more than 12 percent on Thursday after the company's networking division reported disappointing results. But a bright spot was its "Here" mapping division, which is rumored to be a potential acquisition target for Apple.
Revenue at Nokia was up 20 percent year over year to 3.2 billion euros, but operating profits fell to just 265 million euros. The brunt of that was felt by the Nokia Networks division, which saw its profitability take a significant hit — Â falling more than 60 percent to just 85 million euros, despite seeing an increase in total revenue.
Investors were discouraged by what they saw out of Nokia's earnings and the stock tumbled on Thursday. Still, there were bright spots for the company, which got out of the smartphone business by selling its Lumia handset division in 2013 for $7.2 billion.
Among the positives for Nokia was its mapping division, dubbed "Here," which boosted profit by 20 percent to 162 million euros.
Nokia is looking to refocus as a networking company, and is said to be shopping around its Here division for a reported $3.2 billion price tag. Among the companies rumored to be interested: Apple.
If Apple were to buy Nokia's Here for its asking price, it would be the largest acquisition in the company's history, eclipsing the $3 billion it spent on Beats last year.
For Apple, the addition of HERE could play an important role in the buildout of Apple Maps, which drew criticism when it launched in iOS 6. Two and a half years later, Maps still lacks basic features like mass transit data, though Apple is working on enhancing backend support.
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28 Comments
Generally, I'm in favor of any acquisition by Apple that meets one of the following two criteria: - A successful and profitable product or service that can be quickly scaled into Apple's distribution. (That's all the reason needed behind last year's Beat acquisition, and the point seemingly missed by EVERY analyst.) - A product or technology that can significantly improve an existing Apple product or service. (This is where an acquisition of Nokia's Here mapping might be justified.) Of course, the price must be right in any potential acquisition.
Of course, the price must be right in any potential acquisition.
And three point two billion dollars is not the right price. Beats may have been three billion, but they also have hardware revenues which will recoup that quickly. HERE is not a product that brings in direct profit, and Apple isn't going to sell more iPhones just because the built in Maps application improves.
This is something you spend a few hundred million on at most, and even then, it might be cheaper to do it in house.
Maybe they throw in some patents
Tim mentioned, I think on Charlie Rose, that based on hardware sales alone, Beats as a business is $1bn per annum accretive. Great buy. When you look at the Apple store you see the prominent positioning of Beats audio hardware. Apple, IMHO, is 70% there with Maps. They don't need to spend $3.2bn on Here. iPhone and Maps sales are not suffering because of Maps and I think they'll be big announcements on transit and POI improvements to Maps at dub dub. Watch OS has been a strategic software priority for the past few years.
And three point two billion dollars is not the right price. Beats may have been three billion, but they also have hardware revenues which will recoup that quickly. HERE is not a product that brings in direct profit, and Apple isn't going to sell more iPhones just because the built in Maps application improves.
This is something you spend a few hundred million on at most, and even then, it might be cheaper to do it in house.
The article states that HERE made a profit of 162 million euros.
Others do not agree with your valuation:
http://finance.yahoo.com/news/nokias-network-profits-drop-raise-111114226.html