Nokia seems to be on a losing spree and has exhausted all its cash looking for a turnaround and this has led the investors to face something they never have: no dividends. Nokia has been bathing in unprofitable circumstances and is using around $300 million a month to fund its smartphone movement which has led many investing companies to the suspicion that it will soon run out of all its funds.
Michael Antilla, corporate bond manager including Nokia debt said, “Most crucial for Nokia now is to turn around their sales and reach profitability as soon as possible.” He added that, “Until then, it would be rational for them to not pay dividends, to help maintain what cash they have.”
Lack of dividend can risk Nokia to lose yield-focussed investors at a crucial time when the stock prices for Nokia are declining for the fifth consecutive year. The company has paid dividend every year since 1989 and even the collapse of the Soviet Union who was a major customer for Nokia’s tech gear didn’t stop it from paying back to investors.
The Finnish company will omit the payout for 2012 bringing the share price sown to 20 cents per share according to the data compiled by Bloomberg. If the price is to be maintained at its current level Nokia will have to pay $964 million from its drooping bank account. Nokia has maintained silence over this news, Doug Dawson a spokesperson for Nokia refused to comment on their dividend plans. Nokia will announce its annual pay-out this January in 2013.
The company which started off as a paper mill in 1865 had come a long way when it jumped into the mobile phone business in 1980 and was labelled as the Europe’s most valuable corporation but its reliance on being the turtle and not the rabbit in the race impeded its progress and it is still very far from hitting home. Nokia didn’t readily adapt to the touchscreen technology and then with the arrival of the iPhone and android based phones led to a further decline.
With Nokia no longer the bigger handset manufacturing company, it has to accept its role and has to bring its expenditure down to a level that is suited for its current size.
