Nokia shareholders approve sale of handset business to Microsoft

Gathering in Helsinki's Ice Hall pays their last respects to a business that once dominated European phone manufacturing

Nokia shareholders have approved the sale of its mobile phone division to Microsoft after some 5,000 people braved icy rain in Helsinki to cast their vote and pay their last respects to a business that once dominated European phone manufacturing.

In the capital's Ice Hall, usually home to the national ice-hockey team, crowds witnessed a landmark moment in Finnish history. By a 99% majority, the emergency general meeting ratified the €5.44bn (£4.6bn) sale of Nokia's handset division. Nokia's chairman, Risto Siilasmaa, said he was aware the sale "would raise deep feelings" among Finns.

"On the board of directors we understood that, as the decision-makers, we would also be heavily criticised. However, we are convinced that continuing with the old strategy would have most likely led to great difficulties for Nokia, its shareholders and employees," Siilasmaa said.

When the sale concludes early next year, Nokia will be left with a telecoms network equipment business, its online mapping division, and a trove of valuable patents, only 10% of which have been licensed, according to executives. The company will continue to employ 6,000 people in Finland.

In a marathon four and a half hour meeting, much of the backlash from small shareholders was reserved for Stephen Elop, the chief executive hired from Microsoft who guided Nokia's sale to Microsoft before stepping down in September with an €18.8m severance package. Shareholder Hannu Virtanen said Nokia's board of directors had acted naively and Elop had been a "triple-A flop" who "drove the company to ruin". Finns have watched in despair as the 150 year old company closed factories, cut tens of thousands of jobs and cancelled its dividend.

Elop, who reportedly attended the meeting but did not speak, will transfer with the phones business back to Microsoft and is among those tipped to succeed Steven Ballmer as chief executive of the American software group.

The alliance Elop founded with Microsoft while at Nokia has begun to bear fruit, with the Lumia handsets that run Windows software helping to push Microsoft's market share up to 10% in Europe, where Apple and Android still dominate.

Siilasmaa, who has stepped in as interim chief executive, defended his predecessor, saying: "I have never met anyone who had done as much work as Stephen has done."

He revealed that other companies had expressed an interest in buying Nokia at the time of Microsoft's approach, but that the board considered the American group's offer to be the best option for shareholders.

Speaking from the public gallery, Marko Mannfors argued Nokia was being sold at a discount, and that a more appropriate purchase price would have been €15bn.

Nokia's stockmarket value stands at €22.5bn. The shares have doubled in price since the deal was announced, rising to a high of €6 on Monday before falling back to €5.82 by Tuesday's close.

Microsoft had been forced to act because of the money it was losing in supporting Lumia marketing efforts, Siilasmaa claimed. For every handset sold, Nokia paid Microsoft a $10 licence fee to use its software, but Microsoft paid Nokia $20 to support its marketing efforts. "From Microsoft's point of view, the equation does not work," the chairman said.

Nokia's handset arm lost €86m in the most recent quarter. Although that is an improvement from a €672m loss a year earlier, the company is a long way from recovering the market share taken by Apple's iPhone and Samsung's Android handsets.

The remaining networks business now faces a battle with activist shareholders led by Daniel Loeb's Third Point capital, which believes the company will have €8bn in cash once the sale completes, and that it expects a "meaningful portion" to be handed to shareholders as dividends.


Juliette Garside, telecoms correspondent

The GuardianTramp

Related Content

Article image
Microsoft buys Nokia handset business for €5.4bn
Deal delivers Europe's last big handset maker into US ownership and moves Microsoft firmly into device-manufacturing business

Juliette Garside and Charles Arthur

03, Sep, 2013 @10:58 AM

Article image
As Microsoft buys Nokia, Finns mourn their claim to fame
Mobile phone company's decline prompts soul-searching but also relief at headquarters in Espoo

Wif Stenger in Espoo

06, Sep, 2013 @12:27 PM

Article image
Nokia to delay Microsoft Windows Phone beyond October
Microsoft faces long wait to have software running on any handsets as Nokia waits until 'Mango' system is released in October. By Charles Arthur

Charles Arthur

16, Feb, 2011 @10:52 AM

Article image
Nokia bounces back to profit on smartphone demand
Finnish mobile phone maker makes profit of €439m against loss of nearly €1bn a year ago as smartphone sales revive

Juliette Garside

24, Jan, 2013 @1:59 PM

Article image
Nokia and Microsoft join forces in bid to win smartphone war
Staff stage walkout at Finnish firm's headquarters after it announces mobile phones will use Windows system

Charles Arthur, technology editor

11, Feb, 2011 @6:53 PM

Article image
Nokia handset sales drop over Christmas period
Sales of the Nokia Lumia fell quarter on quarter and the handset division suffered a near-30% drop in sales in 2013

Juliette Garside, telecoms correspondent

23, Jan, 2014 @1:58 PM

Article image
Nokia sells 4.4m Lumia phones over Christmas period
Record demand for flagship smartphones means Nokia's handset business is forecast to break even or move into profit after three straight quarters of losses

Juliette Garside, telecoms correspondent

10, Jan, 2013 @5:38 PM

Article image
Nokia shares slump 14% following profit warning
Finnish firm predicts €126m first half loss, blaming software problems and stiff smartphone competition in India and China

Charles Arthur, technology editor

11, Apr, 2012 @7:55 PM

Article image
Nokia: Finland mourns the demise of its proud tech heritage

Entrepreneur Antti Vilpponen explains the national mood following the sale of Nokia's handset business to Microsoft

Antti Vilpponen

04, Sep, 2013 @6:58 AM

Article image
Nokia takes on Android with launch of Windows phones
Finnish firm launches first handsets to run on Microsoft's Windows Phone system in fight to control smartphone market led by Android and Apple

Juliette Garside

26, Oct, 2011 @4:47 PM