Nokia to Omit Dividend for First Time in 143 Years
By Adam Ewing & Kasper Viita - Jan 24, 2013 6:30 AM ET
Nokia Oyj (NOK1V) will omit a dividend for the first time in at least 143 years as the struggling Finnish mobile-phone maker retains cash for its comeback attempt.
The company announced the decision as it reported its first net income in seven quarters and an increase in net cash, sending its shares higher. Even the World Wars and the breakup of the Soviet Union, a major buyer of Nokia’s networking gear, didn’t stop the company returning cash to investors.
Nokia is trying to claw back business after sales plunged and combined losses had reached almost 5 billion euros ($6.7 billion) since early 2011. Chief Executive Officer Stephen Elop has cut more than 20,000 jobs and is conserving cash to challenge Apple Inc. (AAPL) and Google Inc. (GOOG) with devices running Microsoft Corp. software.
The dividend omission “is a very important step because it shows management is conscious of the work that is ahead,” said Eric Beaudet, an analyst at Natixis Securities in Paris. “It’s clearly a strong signal to the market that says ’Don’t worry about our balance sheet, we’ll do what it takes.’”
Nokia was projected to forgo a payout, according to a Bloomberg dividend forecast. To maintain the dividend at its previous level, Nokia would have had to pay about 750 million euros from its reserves. The company’s net cash rose to 4.4 billion euros at the end of the fourth quarter, and the payout omission will “ensure strategic flexibility,” Nokia said.
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