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Can Nokia Exist If It Sells All Of Its Businesses?

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Can Nokia Exist If It Sells All Of Its Businesses?

Nokia Corporation (ADR) (NYSE: NOK) famously sold its handset business to Microsoft Corporation (NASDAQ: MSFT) for $7.52 billion.

This week the company sold its mapping business to BMW Group, AUDI AG VORMALS AUDI (OTC: AUDVF) and Daimler AG (OTC: DDAIF). The three automakers reportedly paid $3.07 billion for the business, which is known as HERE.

"We all thought Nokia was fading away when it sold its smartphone business to Microsoft," tech industry expert and analyst Jeff Kagan told Benzinga. "However, we have been seeing new life at Nokia, first with tablets and now with smartphones. Nokia is getting back into [that business]."

Kagan said it's an "inspiring story" but thinks Nokia will have to "prove" that it is back on track.

"There are many big time players trying to break into the same space with little luck," Kagan added. "Eight years ago Nokia and Blackberry were No. 1 on the handset side for handsets and smartphones. Leaders today are Apple iPhone and Google Android [manufacturers] like [the] Samsung Galaxy."

Kagan also pointed that BlackBerry Ltd (NASDAQ: BBRY) has been trying to "break back into the wireless space with very little success to date."

"Now it looks like Nokia is ready to try and break back in to the wireless industry," he said.

Related Link: Is Ford Open To More Startup And Technology Acquisitions?

What's Left?

Without HERE, Nokia has become more of a business-to-business company. Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, said the firm might also develop a consumer service with its OZO virtual reality product.

Rob Enderle, principal analyst at Enderle Group, said Nokia is still planning to go back into phones and is "still in the networking and switch business."

"Nokia is taking the [cash] and funding a dramatic company change," Enderle told Benzinga.

Automaker Advantage

Why would automakers agree to pay $3 billion for Nokia's mapping business?

"Automakers feel that if they license mapping from, let's say, Google or Apple, they will be locked into their platforms," said Moorhead. "HERE is one of the last independent mapping services out there."

Enderle said that investors could think of it as a "hedge against one carmaker locking up this technology or some third-party overcharging for map royalties."

"These firms are assuring they have access to maps regardless of whatever else happens (mergers, patent trolls, etc.)," Enderle added.

Finally, Kagan said that automakers "need advanced mapping and in-car management systems like HERE."

"Navigation, web access, entertainment and automation are the future in the auto industry," said Kagan. "HERE is a great place to start."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

 

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Posted-In: Audi BMW Group daimler HERE Jeff KaganAnalyst Color Exclusives Tech Best of Benzinga

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