Result of planned restructuring expected to have a positive impact on operating margins
Nokia has announced today that it will not be forming the new CDMA device company with SANYO it had previously announced in February this year.
Nokia says it decided not to pursue its earlier plan as it thought the terms and conditions of the proposed partnership were not satisfactory and in the best interests of Nokia’s long term success. And, in addition to an already ‘financially prohibitive’ CDMA ecosystem in general, recent developments may indicate that the CDMA emerging markets business case is looking more challenging, says the company.
Nokia says it does, however, intend to selectively participate in key CDMA markets, with special focus on North America, and is planning to ramp down its own CDMA R&D and manufacturing by April 2007. It is also said to be evaluating opportunities to leverage its existing CDMA product development infrastructure and assets in profitable parts of the business.
“We feel it would not be in our best interests to make an agreement that proved to be less beneficial than originally anticipated,” said Kai Öistämö, Executive Vice President, Nokia, Mobile Phones. “After exploring all available opportunities and making every effort to create a sustainable CDMA business, this is our only viable option.”
The company’s preliminary estimate for the planned restructuring charge is EUR 150 million in the third quarter 2006. Nokia expects that the result of the planned restructuring of the CDMA business would have a positive impact on Nokia operating margins.