Hard-up Nokia sells HQ

As a sign of the tough times the Finnish handset manufacturer is going through these days, Nokia has agreed to sell and lease back its head office building in Espoo, Finland. The firm said that it sold the office because “owning real estate is not part of Nokia’s core business”.

The firm said it received €170m for its headquarters from Exilion Capital Oy, a company owned by four Finnish institutions specialising in the management of real estate private equity funds. The funds managed by Exilion Capital invest mainly in commercial and residential properties in Finland’s growth centres.

Nokia expects to complete the sale by the end of 2012.

“We had a comprehensive sales process with both Finnish and foreign investors and we are very pleased with this outcome,” said Timo Ihamuotila, Nokia’s CFO.

“When good opportunities arise we are willing to exit these types of non-core assets. We are naturally continuing to operate in our head office building on a long-term basis,” he added.

In October 2012, Nokia posted its fifth consecutive quarterly loss. The firm recorded an operating loss of €576m ($752) for the quarter ending September 30, 2012, dwarfing the €71m loss the firm posted in the same period in 2011. Net sales also dropped 19 per cent year-on-year from €8.98bn to €7.24bn.

The firm saw its net sales fall in every region it operates in during the quarter, aside from Latin America. CEO Stephen Elop admitted at the time that the firm must review its assets.

“While we continue to focus on transitioning Nokia, we are determined to carefully manage our financial resources, improve our competitiveness, return our devices and services business to positive operating cash flow as quickly as possible, and ultimately provide more value to our shareholders,” he said.

Malik Saadi, principal analyst for handset and devices at Informa Telecoms and Media, also warned at the time that investors must be losing patience and suggested that they would soon be considering options to dissolve the business.

“The situation is getting critical. Nokia cannot afford another bad quarter, it’s now playing for its survival over the next two quarters,” he said. “I don’t think investors will afford Nokia another bad quarter and Q4 is going to be very tough, the competition is very intense.”