Nokia shares pop on Siemens deal

July 1, 2013: 6:01 AM ET
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Nokia has taken full control of its profitable networks joint venture from Siemens for $2.2 billion, less than analysts were expecting.
LONDON (CNNMoney)

Nokia shares popped higher Monday after the company bought Siemens out of their profitable joint venture in telecoms networks.

The Finnish company paid 1.7 billion euros ($2.2 billion) for Siemens (SI)' 50% stake in Nokia Siemens Networks, a move which broadens its range of strategic options and buys time as it attempts to revive its ailing handset business.

Nokia (NOK) has been searching for a way to return to profit after falling way behind rivals like Apple (AAPL) and Samsung (SSNLF).

Sales of its Lumia handset jumped 27% in the first quarter but group revenue plunged and it posted an operating loss of 150 million euros.

Nokia Siemens Networks, which competes with China's Huawei and ZTE Corp (ZTCOF), returned a healthy profit in the first quarter, helped by its focus on 4G Long Term Evolution (LTE) networks.

"Nokia Siemens Networks has established a clear leadership position in LTE, which provides an attractive growth opportunity," Nokia Chief Executive Stephen Elop said in a statement.

Related: Nokia Lumia 928: Design is not enough

The Nokia Siemens Network price tag was lower than analysts were expecting and Nokia's Helsinki-listed shares jumped as much as 10% before trimming gains to stand around 7% higher at 3.05 euros.

"We also believe Nokia is acquiring this asset at a very attractive price, well below what an initial public offering or trade sale could bring in the future," Liberum Capital analysts said in a research note.

Nokia plans to announce a new name and brand for its networks equipment unit when the transaction closes during the third quarter of 2013.

Related: Blackberry shares nosedive

Nokia Siemens Networks' management team will be retained and it will continue to be based in Espoo, Finland, with a strong presence in Germany.

The joint venture was established in 2007, combining Nokia's networks business and Siemens' carrier-related operations for fixed and mobile networks.

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